Nearly 10 years after the financial crisis, many Americans say it had no impact, yet many don’t trust the stock market and plan to work longer than anticipated, new research suggests.
According to survey data released by Hartford Funds, 40% of respondents say the financial crisis had no impact on their life, but 42% reported that they avoid the market and nearly half say they have altered their spending and savings habits (46%). In addition, the findings show that more than a quarter (26%) of respondents adjusted their anticipated retirement date and plan to work longer then they had planned, while 25% had to change jobs or take on additional jobs.
What do these results suggest? One theory is that Americans have selective memories. “Americans are forgetting what it felt like during those challenging times of 2008-2011,” says John Diehl, Senior Vice President of Strategic Markets at Hartford Funds. Diehl recommends that “advisors should continue to remind clients that markets can get turbulent, so they should steer clear of emotional investments and knee-jerk reactions by maintaining a fundamentally diversified portfolio to help them achieve their long-term financial goals.”
What are Americans doing to prepare for the next recession or market downturn? When asked that question, nearly half (43%) of respondents said they are taking a “wait-and-see approach” to the markets, while 17% reported that they are confident in their investments and are not touching their portfolios. On the flip side, 21% said they are increasing their investments to take advantage of the upside. Diehl observes that “Inertia is a powerful force, and it presents an opportunity to educate investors who may be at a standstill about the benefits of perspective and direction from a financial advisor.”
The study’s findings further show that there is an apparent demographic divide across market perspectives and actions. Nearly a quarter (23%) of Americans are making cash withdrawals from their investments to prepare for the next market downturn. Perhaps somewhat surprisingly, the results show that those with household income over $75,000 are more likely to liquidate and stockpile their cash than those who make less than $75,000.
Meanwhile, Millennials apparently are hoarding more cash than any other generation, with more than a quarter (26%) taking money out of the market for cash savings, the report notes. As this generation was coming of age during the last financial crisis, they also have the least amount of trust in the market today, with nearly half (48%) avoiding the market altogether, according to the findings. Hartford notes that this generation continues to prepare for the worst as 24% of respondents have already shifted their retirement timeline and plan to work longer than originally anticipated. On the positive side, 38% report that they are also trying to compensate for this delay by increasing their retirement savings in traditional retirement vehicles.
The telephone survey was conducted Oct. 12-15, 2017, using two probability samples: randomly selected landline phone numbers and randomly selected mobile phone numbers for a combined sample of 1,006 adults living in the continental United States.
