Why does investing pack such an emotional punch for retirement savers?
Background: In May 2022, Principal Financial Group surveyed nearly 700 retirement plan participants in the U.S. to gauge their thoughts and concerns about investments and saving for retirement--and what they’re doing and not doing as a result.
Findings: The survey uncovers several simple ways plan sponsors can help individuals feel more confident about their investments and strengthen their overall retirement security. The survey found that for many individuals, investing can be an emotional experience filled with a host of questions and concerns. The following three fears are at the top of the list: the rate of return not keeping up with inflation; extended periods of investment losses; and not knowing who to trust.
With these concerns heavy on their minds, individuals sometimes feel uncomfortable about making investment decisions:
Although many individuals do not connect needing financial guidance with events like a raise in salary or financial windfall, they are conscious of life-stage moments that may indicate a shift in finances. These milestones pique their interest in seeking out professional financial help, with 46% motivated by age, and 41% motivated by life event.
So, what’s holding them back? Concern about the cost of working with a third-party advisor is the main reason. But what many individuals may not know is that their employer’s current retirement plan may already offer built-in advisory services with no added cost.
Bottom line: The findings show an overall correlation between the availability of financial resources and third-party advice with individual confidence. Investment education and helping individuals see the dotted line between healthy financial behaviors and the value of investing in professional advice could be key to helping individuals feel more positive about their investments.
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