Break from the Grind June 13, 2017

Dads Have a Great Influence on Retirement Savings

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With Father’s Day approaching, a recent survey from John Hancock Retirement Services reveals how fathers can have a significant impact on how one prepares for his or her financial future. Three in four Americans say retiring is an important milestone.

More than half of Americans surveyed (56%) say their father influenced their retirement savings habits, and the majority of Americans with retired fathers (62%) say their retirement plans are at least a little similar to their fathers’.

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Younger Americans are more likely to have connected with their father about retirement plans, and nearly three-fourths (74%) of Millennials have retirement plans that are at least a little similar to their fathers.

The vast majority (88%) of respondents believe their father is enjoying their retirement at least a little, and 10% say their fathers are spending their retirement working. Retired dads’ enjoyment stems from spending their time relaxing (28%) or doing more of what they love (27%).

Overall, the survey found that although eight-in-ten Americans have taken actions to prepare for retirement, nearly one-fourth (23%) believe they will never be able to fully retire. Three in four Americans want to retire at age 65 or earlier, but only half say they could retire comfortably at the age they would like.

Participants June 13, 2017

Retirees and Non Retirees Differ on Interest Rate Outlooks

Wells Fargo’s Investor and Retirement Optimism Index offers some insight on what investors think of the interest rate environment and how they intend to address it.

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The Federal Reserve has raised interest rates twice since last year and many analysts expect that trend to continue, but many retirement savers see no immediate impact on their finances. According to the Investor and Retirement Optimism Index by Wells Fargo and Gallup, most respondents (66%) say the recent hikes have had no impact on investments, loans or any other aspect of their finances.

Still, the index reveals some disparities on perceptions of the interest rate environment among retirees and non-retirees. For those that did see some impact, 16% of retirees said it was positive. Only 9% of retirees said it was negative. As for non-retirees, 12% said it was positive and 17% said it was negative.

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More than half (60%) of retirees are satisfied with current interest rates, as are 60% of non-retirees. Twenty-nine percent of non-retirees are dissatisfied, and 37% of retirees feel the same way.

When asked whether they felt they had a good understanding of how higher interest rates would affect stock investments, most respondents had an optimistic response. More than half of retirees (77%) and non-retirees (76%) said they did. Only 16% of retirees and 23% of non-retirees indicated they were not aware of how these market forces affected their stock investments.

Answers varied when asked which situation would reflect positively on investments. Thirty-nine percent of retirees preferred a high interest rate environment, and 21% of non-retirees said the same thing. More than half (52%) of retirees said a low-interest environment would be better for their financial situations and 76% of retirees agreed.

“Whatever your age, low rates can hurt savers,” says Brian Rehling, co-head of Global Income Fixed Income Strategy, Wells Fargo Investment Institute. With rising rates, the inertia among investors to stick with their investments shows that they may be more comfortable with the risks in the stock market. However, the lack of meaningful rate and/or credit shocks in recent years may have given some investors a false sense of security.”

In response, most investors (67%) said they will make no changes to their investments if interest rates continue rising. However, 23% said they would take money out of stocks and into interest-bearing accounts or investments such as certificates of deposit (CDs). Twenty-four percent of non-retirees and 19% of retirees said they would do this.  

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