Kiplinger and Personal Capital survey shows 30% of investors don’t have a financial plan and even fewer have a defined strategy for market volatility
Washington, DC, January 9, 2020 – Even on the heels of a largely successful stock year, investors fear market volatility and have reported stockpiling cash and considering reducing investments in stocks and even delaying retirement, according to new research from Kiplinger’s Personal Finance magazine and digital wealth management company Personal Capital.
At the same time, most investors say they know the value of having a long-term financial plan to get them through the ups and downs of the stock market, which is nearing its eleventh anniversary as a bull market.
“While most people saving for retirement need to increase their stock holdings to reach their savings goals, many who were scarred by the Great Recession are now nervous about the economy and the bull market’s longevity. They want to reduce their risk as much as possible,” said Mark Solheim, editor of Kiplinger’s Personal Finance. “This survey shows that market volatility is a genuine concern for investors, especially those who are nearing retirement age.”
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An overview of survey results featuring graphics can be found here (opens in new tab). A copy of the feature story in Kiplinger’s Personal Finance February 2020 edition can be found here (opens in new tab).
Kiplinger and Personal Capital found that in response to anxiety about a bear market, investors are considering:
- Increasing cash holdings. Respondents are currently holding almost 18% of their portfolios in cash – nearly six times the average of 3% to 5%. Notably, more than half (53.4%) said they would also increase holdings in traditional savings accounts to combat market volatility.
- Reducing stock investments. Just about half of the respondents (47.1%) would consider reducing investments in stocks to combat market volatility, and of those, four out of 10 would consider reducing stock holdings to 25% or less of their portfolio.
- Claiming Social Security early. If portfolios declined by more than 25%, then about 42% of respondents ages 55-64 would delay retirement and 1 in 5 (21.2%) said a downturn would cause them to consider claiming Social Security earlier than planned.
- Delaying retirement. More than 1 in 4 (27.2%) people ages 55-64 say that a downturn in the value of their investment portfolio or retirement accounts would cause them to consider delaying retirement, with nearly 3 in 4 (70.8%) saying they would delay retirement by 1 to 4 years.
- Sticking to their financial plan. Nearly 7 out of 10 (69.5%) say they have a long-term financial plan, and two out of three investors (62.7%) say they are dealing with market volatility by staying diversified and waiting it out. Investors can learn more about the costly mistakes of emotional decision-making in the Investor’s Guide to Volatile Markets (opens in new tab), a free report from Personal Capital.
The survey also shows that there are opportunities for many Americans to consider the kind of personal financial advice that would help them through any turbulent times. For instance, the study found only two out of ten investors (18.6%) say they are currently seeking the advice of a professional advisor to address market volatility.
“It’s encouraging to see so many Americans prioritizing retirement savings and working with a professional to build long-term financial plans,” said Kyle Ryan, Executive Vice President of Advisory Services at Personal Capital. “Your trusted advisor should work with you to create a holistic, long-term financial plan that is built to weather all market cycles over time, including volatile ones. When volatility inevitably hits, or even if you’re just feeling anxious enough about volatility to consider knee-jerk changes that could impact your long-term goals, your first call should be to your advisor. A trusted advisor will help keep you from making emotional decisions and make sure you stay on track toward growing your net worth.”
Methodology
The Kiplinger-Personal Capital national poll about The Impact of Market Volatility on Retirement Planning was conducted on October 17-21, 2019, with 850 respondents. The online survey has a +/- 3% margin of error and a 95% confidence level.
Respondents were screened for age, household income, and investible household assets with an equal male/female split. Those participating had a minimum age of 40, a minimum $50,000 annual household income before taxes, and a minimum $100,000 combined household net worth, excluding primary residence.
About Kiplinger’s Personal Finance
For a century, the Kiplinger organization has led the way in personal finance and business forecasting. Founded in 1920 by W.M. Kiplinger, the company developed one of the nation's first successful newsletters in modern times. The Kiplinger Letter, launched in 1923, remains the longest continuously published newsletter in the United States. In 1947, Kiplinger created the nation's first personal finance magazine. Today, The Kiplinger Washington Editors, Inc., is a wholly-owned subsidiary of Dennis Publishing, Ltd.
Located in the heart of our nation's capital, the Kiplinger editors remain dedicated to delivering sound, unbiased advice for your family and your business in clear, concise language. Become a fan of Kiplinger on Facebook (opens in new tab) or Kiplinger.com (opens in new tab) and follow Kiplinger on Twitter (opens in new tab), LinkedIn (opens in new tab), and Tumblr (opens in new tab).
Contact Information: Dan Drummond, Commonwealth Public Affairs,dan@commonwealthpublicaffairs.com,202.243.8621
About Personal Capital
Personal Capital is an industry-leading digital wealth management company. We do the right thing by the everyday investor by taking a holistic, 360-degree approach to money management. Our state-of-the-art tools and technology provide investors with a complete financial picture and our registered investment advisors provide guidance and logical strategies, based on a personal understanding of an investor’s financial picture and goals. We currently manage more than $11 billion in assets and have offices across the United States. For more information, please visit http://www.personalcapital.com (opens in new tab) or connect with us on Facebook (opens in new tab), Twitter (opens in new tab), Instagram (opens in new tab) or Linkedin (opens in new tab).
Advisory services are offered for a fee by Personal Capital Advisors Corporation, a wholly owned subsidiary of Personal Capital Corporation. Personal Capital Advisors Corporation is a registered investment advisor with the Securities and Exchange Commission (“SEC”). SEC registration does not imply a certain level of skill or training. Investing involves risk. Past performance is not a guarantee or indicative of future returns. The value of your investment will fluctuate, and you may gain or lose money.
Contact Information:Mike Dorsey, Praytell (for Personal Capital), personalcapital@praytellagency.com
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