How times have changed. When the market was booming in the 1990s and parts of the 2000s, investors looked for ways to increase returns. Now, based on an online survey of 3,400 people age 55 or older conducted by AIG and Ken Dychtwald of Agewave, it seem that over 80% of investors seek safety. The most popular investment option (at 67%) was one guaranteed not to lose value, followed closely by investments that protect against loss providing income for life. Only 19% selected funds that have higher returns but greater risk. Half of the respondents felt less financially secure than a year ago, but 30% who work with an advisor felt better prepared than last year.
Investors come in different shapes and sizes. Investment choices change as people age and depending on the economy. First-generation Americans are generally not investors – they are savers. Even TDFs that minimize risk as people get closer to retirement may miss the mark for these plan participants. Today, assuming that people will retire at 65 may be a fallacy. Investment options and plan design both need to catch up to the “new normal” and the needs of different constituents.
