A recent survey by the Allianz Life Insurance Company of North America found that 51 percent of non-retirees question whether their 401(k), 403(b) and 457 plans are adequate ways to save for retirement. Twenty-seven percent of respondents said they believe the safest place for their money, after paying their expenses, is under the mattress.
Children's college funds also are taking a hit because of the recent economic and stock market volatility. Twenty-five percent of those surveyed said they have reduced or stopped saving for college.
Nearly half of all respondents said they have changed the way they save because of the current economic environment. Nearly 20 percent have reduced spending on other things to keep saving for retirement at the same rate, and 30 percent have stopped or decreased the amount they are saving for retirement. A disturbing 28 percent said they haven't even started saving for retirement.
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"Given the gut-wrenching events and market volatility of late summer, consumers are questioning traditional retirement savings vehicles and changing their savings habits," said Katie Libbe, vice president of consumer insights at Allianz Life. "Recent events have only deepened the uncertainty many have felt about retirement since the market meltdown of 2008 when the average 401(k) account balance lost nearly 30 percent of its value."
According to the survey, 61 percent of U.S. non-retirees own investment/retirement savings products such as employer-sponsored retirement plans, stocks/bonds/mutual funds, pensions or annuities; 39 percent do not own any of these. Nearly half of respondents said they participate in 401(k), 403(b) and 457 plans. Twenty-seven percent hold stocks, bonds or mutual funds outside of employer-sponsored retirement plans. Forty-six percent of non-retirees feel saving for retirement is an equal priority to saving for their children's college education. While 22 percent feel saving for college takes priority over retirement, 32 percent think otherwise, ranking retirement as a higher priority.
"Retirement and college savings often draw from the same bucket of available funds, and people have a hard choice to make," said Libbe. "Our research shows that lower income households feel paying for their children's education takes priority over saving for their own retirement. We also found that between the sexes, 39 percent of men placed saving for their own retirement ahead of saving for their children's college education, versus 27 percent of women. Conversely, 53 percent of women felt that retirement and college savings were equal priorities, versus 37 percent of men."
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