The Growing State of Apprehension About Retirement - Financial Advisor IQ

In the midst of growing accounts of Social Security’s rapidly evolving reserve fund depletion, there’s a curious mindset developing with respect to how future retirees view their post-career financing picture. To be specific, Financial Advisor IQ’s Alex Padalka, in a post on their website, offers quotes from a recent Allianz Life survey suggesting a pessimistic outlook in the minds of three-quarters of the more than 1000 participants. That’s probably not that surprising, given the gloomy media accounts of what’s projected for Social Security in less than a decade, but what makes this mindset even more curious is the emerging preference to avoid the risk of embracing Wall Street as a way to build retirement wealth.

As Padalka explains, “(n)early three in four Americans don’t think they can rely on Social Security for their retirement, even as many are opting out of the stock market.” Digging further into the survey results, he notes that Gen Xers–those born between 1965 and 1980, also sometimes referred to as the “baby bust generation”–appear to have the most cynical view of “…their ability to afford the lifestyle they want in retirement, given the increased cost of living.” Compounding this negativity is the potential fear that many have of employers suspending 401(k) matches, a fear that Gen Xers and Millennials alike share.

Given the many uncertainties, it’s probably not surprising that, as the Allianz Life survey theorizes, “Many Americans, meanwhile, are being cautious about investing: 62% would prefer to have their assets in cash than put up with tumultuous markets.”

The Allianz Life survey results are interesting, and they tend to intensify the importance of Congress addressing the Social Security solvency program sooner than later, and certainly soon enough to bake the necessary program reforms into the system before their impact becomes too severe. The solvency issue is not a self-correcting problem…it will take substantial political courage to resolve.

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