American investors’ confidence and risk tolerance remain low despite the stock market rebound. The 2008 global financial crisis, the dot com bubble burst before that, and a volatile stock market dominated by hedge funds and computerized trading appears to have permanently reset the risk parameters of most older investors. According to a recent study (the AIG Retirement Re-Set Study), the vast majority (80%) of those age 55 and older are more cautious investors seeking lower but safer, more predictable returns.
Sixty-seven percent (67%) of the survey respondents reportedly preferred investments that are guaranteed not to lose value more than investments with lesser loss protection and guaranteed income for life (62%), guaranteed rising income (58%), products that provide a death or disability benefit (50%), and investments with higher risk and higher potential returns (19%) (“Pre-retirees looking for return of principal ? not return on principal”).
Over 50% of the respondents said they feel less financially secure than they did a year ago. Many are willing to work longer (if they can) or accept a less expensive retirement lifestyle in order to be in a better position to accept lower but safer returns.
Page Perry is an Atlanta-based law firm with over 150 years of collective experience maintaining integrity in the investment markets and protecting investor rights.