Headlines you need to know this week
Most savers maintained their retirement savings in 2021Most savers (67%) maintained their contributions to their retirement accounts last year, according to a recent survey. Among those that did make changes, 17% said they saved less and 16% said they contributed more. Geography made a difference with 44% of residents in the Northeast saving more for retirement, compared with 18% in the West and Midwest that also saved more. In the South, 14% said they saved more and 31% said they saved less. The study attributed the disparity to average wage differences. Also, 59% of men said they saved more compared with 41% of women.
Investors prepare for market uncertainty, survey findsNearly 75% of respondents in a recent poll ranked inflation among the top three issues they are worried about, followed by additional Covid-19 variants, supply chain problems, and a downturn in the stock market. More than half of respondents noted they believe there will be a downturn in the market in the next five years, and among them, 58% think it will have a negative impact on their finances. Most respondents (71%) that consider themselves "aggressive" investors believe a stock market pullback would benefit them financially .
Women focusing on retirement savingsMany women are worried about retirement and have changed their retirement timing due to uncertainty around the pandemic, according to a recent survey of defined contribution plan participants. About 20% said they are delaying retirement. Fewer women increased contributions in 2020 compared with men, likely due to economic pressure. Women are taking steps to improve their savings, including changing investments. Nearly half said they want to learn about investment income options.
Many workers seeking financial adviceIn a recent survey of more than 5,700 adults, respondents cited the top five financial areas where there was an unmet need for advice – an advice gap. The topics included handling market volatility, choosing investments, estimating required minimum distributions (RMDs), making buy/sell decisions on investments, and estate planning. Calculating RMDs was among the top five concerns across all age groups. Estate planning advice was an unmet need across all income levels. More households sought help for multiple financial tasks in 2021, with growth driven by households with $100,000 to $500,000 in assets.
Investors less bullish on stock market, surveyInvestor sentiment grew more bearish in the AAII Investor Sentiment Survey for the week ended January 12, 2022. The percentage of those citing a bearish sentiment – the belief that stock prices will decline in the next six months – increased to 38.3% from 33.3% in the previous week. A bullish sentiment — the belief that stock prices will rise — dropped to 24.9% from 32.8% in the prior survey. The number of people citing a neutral view increased by 2.9 percentage points.
Student debt is obstacle for MillennialsStudent debt has impacted Millennials more than any other generation according to a new study. Many Millennials feel financially stalled by rising college costs and the ongoing economic recovery. The research looked at the impact of student and medical debt keeping many Millennials from saving and building credit to buy a home. Among respondents, 40% said student debt has had a “moderate” to “very strong" negative impact on their plans to purchase a home.
M&A activity expected to rise, study findsThe number of mergers and acquisitions among advisory firms has been climbing and is expected to continue to rise, according to a new report. Valuations of registered investment advisory firms have also increased, the report found. In 2021, M&A deals rose by 50%. Nearly two thirds of respondents said they believe M&A will increase in 2022.
More employers adopt auto enrollment for retirement plansNearly two thirds (62%) of businesses with a 401(k) plan used auto-enrollment in 2020, compared with 60% the previous year, a study found. In addition, most employers used a 6% default deferral rate of income for the first time in 2020, versus the prior average of 3%.
Early retirement trend continuesThe trend in early retirement among workers 55 and older continues. A recent report found that nearly 70% of the 5 million people who left the labor force in 2020 are over the age of 55. In addition, the rate of those retirees taking new jobs has declined. Investing and increasing property values may have helped many Baby Boomers retire, the report concluded.
ESG investing grew in 2021ESG (environmental, social, and governance) investing grew exponentially in 2021. An estimated $120 billion was invested in ESG investments in 2021 compared with $51 billion in 2020, according to a recent report. The asset flows represented a continuation of a positive trend. The amount of assets invested in ESG increased tenfold from 2018 to 2020.
Wealthy investors are focused on taxesA recent survey of millionaire investors found 55% expect to sell some assets in the coming year, including stocks and real estate, due to potential tax changes. The survey included individuals with $1 million or more in investible assets. Responses varied across generations, with 90% of Millennials, 54% of Gen Xers, and 29% of Baby Boomers stating they plan to make a change.
Saving more is top resolution for 2022Few adults report feeling confident about their financial health. A recent survey found 5% of adults see their finances as “rock solid.” Nearly half (47%) of respondents described their financial condition as “a work in progress.” Baby Boomers were the most confident generation with 29% of respondents describing their financial health as “fit.” Gen Xers were the most skeptical or pessimistic. The top financial resolution for 2022 was increasing savings, cited by 59% of those surveyed.
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