Headlines you need to know this week
Millennials confident about retirementMillennials are more confident about retirement than Gen X and Gen Z, according to a new study. Most Millennial respondents (68%) are confident that they will be able to retire when they planned compared with 62% of Gen X. Millennials are also more confident that their savings will last in retirement.
Investors may not understand Social SecuritySome investors may not be optimizing Social Security benefits and could benefit by working with a financial professional, according to a new survey. Half of those surveyed (51%) already receiving Social Security did not understand how much they will receive in income, and 55% did not know what percentage of pre-retirement income was being replaced by their benefits. About half of respondents said their advisors did not discuss Social Security. Two thirds of respondents said they would be likely to switch advisors to one who could discuss Social Security.
More investors interested in financial planningSince the pandemic began, more younger investors are expressing interest in forward planning, a new study found. More than half (52%) of investors said the value of financial advice has increased for them since the pandemic. In addition, investors said they are more likely to recommend an advisor who talks to them about values. Nearly two thirds (62%) said they have had a review session with an advisor, and 43% said they discussed financial planning.
Bill focuses on financial security for womenLast week, a bill designed to safeguard retirement savings was re-introduced in the Senate. The goal of the Women’s Retirement Protection Act of 2021 is to address the savings gap and boost financial security for women. In submitting the bill, lawmakers noted that the pandemic and economic downturn in 2020 had a disproportionate impact on women. The bill would expand spousal protections for defined benefit plans to defined contribution plans. It would also help provide retirement benefits for women with lower incomes.
ESG attracted record inflows in 2020In 2020, ESG (environmental, social, and governance) investments saw record inflows. Inflows into ESG products grew 140% in 2020, compared with 2019, Moody’s reported. According to a separate survey, 58% of respondents said their interest in ESG grew last year and nearly 20% said they began incorporating ESG factors in their portfolios. A full 67% of those surveyed said they plan to buy more shares of companies focused on ESG.
Emotion can lead to poor investment choices: ResearchWhen it comes to investing, emotion can lead to poor investment choices, recent research found. Individuals can become overconfident and excited about rising profits and fearful of loss. As a result, investors may buy when assets are high and sell when they are declining. A 2021 Dalbar study found that individual investors consistently underperformed the market over the 20 years ended December 2020. The research found that unadvised investors saw an average annualized return of 5.96% compared with 7.43% for the S&P 500 Index and 8.29% for the Global Equity Index 100.
Many states receive poor grades in financial educationMany states do not offer courses in personal finance or financial decision-making for K-12 students. According to recent report, two thirds of states earned grades of “C” or less for financial literacy education. Only 17 states earned a grade of “A” or “B.”
Reaching the next generation of investorsMore than half of Millennials polled said they would consider working with their parents’ financial advisor. But only 20% of those respondents have actually met the advisor. The study points to several ways for advisors to reach out to the next generation of investors. These include positioning yourself as a resource for the entire family, embracing digital communications, and seeking to understand their individual values and goals.
Pre-retirees focus on Social Security solvencyWorkers’ concerns about Social Security have increased since last year. In a recent survey, 71% of respondents said they are concerned that Social Security could run out in their lifetimes. About 59% noted they are more worried about Social Security today than before the pandemic. At the same time, 19% of respondents stated that the pandemic would likely change when they decide to claim benefits.
ETFs poised to set a new record in inflowsExchange-traded funds (ETFs) listed in the United States are positioned to set a record in net inflows this year, research found. About $473 billion has been invested in ETFs through June. In 2020, ETFs took in a record $504 billion for the year.
Savers monitor pandemic impactA new study found that the pandemic has had a disproportionate impact on the finances of Millennials and Gen Xers. In the research, 41% of Millennials and 39% of Gen Xers reported negative impacts of the pandemic on their financial situations, compared with 33% of late Baby Boomers and 29% of Early Baby Boomers. Younger generations were also concerned about retirement, with 57% of Millennials and 49% of Gen Xers citing worries about the impact of the pandemic on their nest eggs.
Using baby bonds to try to close the wealth gapNew York City and Connecticut are starting ‘baby bond’ programs to address wealth inequality, according to a recent report. The states will gift publicly financed savings bonds to children. In Connecticut, the bonds will total $3,200 each and will be distributed to about 16,000 Medicaid eligible children each year. New York City is funding $100 college savings accounts for all kindergarten students in public schools. In Connecticut, each bond is projected to be worth about $10,000 when the child is 18. The bonds can also be used to pay for school, invest in a business, buy a house, or save for retirement.
Read our views on preserving and enhancing wealth for the future with financial-planning experts Bill Cass and Chris Hennessey
Explore our thinking about today’s financial markets
Stay on top of trends in mobile technology, software, and social media