Protecting Retirement Investments From Risk a Top Concern for Americans of All Ages Says Schwab Survey

One in four Americans plans to seek professional advice in the next six months

Thursday, May 17, 2012 6:00 am PDT



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"Younger Americans have seen their parents’ retirement savings and their own retirement savings take some hits with the recent market volatility"

SAN FRANCISCO--(BUSINESS WIRE)--Protecting against risk is the most important concern for Americans of every age when it comes to managing their retirement assets, according to Charles Schwab’s latest quarterly Retirement Pulse Survey released today. Schwab’s survey found that 35 percent of Americans consider protecting retirement assets more important than growing those assets, while only eight percent consider growing retirement assets more important than protecting them.

“Risk management strategies vary by investor based on an individual’s situation and goals, and it's impossible to completely eliminate risk from a portfolio, but by choosing an appropriate mix of investments people of all ages can better control the types and levels of risk in their portfolios,” said Carrie Schwab-Pomerantz, CFP, senior vice president, Charles Schwab & Co., Inc. “In a continued choppy market environment it’s not surprising that investors are concentrating on managing risk and protecting their nest egg. It’s also clear that the sharp downturn in 2008 remains fresh in their minds.”

The 2008 downturn may have had a particular impact on younger Americans who noted in the survey they were most likely to “sit on the sidelines” in the next six months and move assets into more stable investments such as money markets and savings accounts. The survey found 29 percent of those age 18-34 plan to pull money out of the market, with only 11 percent of older Americans indicating they would take this action. “Younger Americans have seen their parents’ retirement savings and their own retirement savings take some hits with the recent market volatility,” said Schwab-Pomerantz. “Younger Americans are seeming to be more risk averse than ever before. While their time horizon for retirement should be conducive to staying invested and maintaining a more moderate or even aggressive risk level, we are seeing the younger generation sway to be more conservative given what they have witnessed in the market in recent years.”

Additional findings from Schwab’s survey include:

  • One in four Americans (26 percent) plan to seek professional advice on managing their retirement accounts in the next six months given the recent economic environment and uncertainty about the future.
  • At least two in five Americans (42 percent) are concerned with uncertainty about future legislation that may impact retirement accounts.
  • Other major concerns include protecting retirement savings during a period of market volatility (25 percent), generating enough income to live on if interest rates remain low (23 percent), striking the right balance between portfolio growth and asset protection (20 percent), and growing retirement savings to outpace inflation (18 percent).
  • Only six percent of respondents plan to take additional risk in their retirement investment accounts in the next six months.

The survey did find a disconnect between what Americans say and do in regard to investing for retirement. Despite more than a third of survey respondents feeling that protecting assets is always the most important consideration, 37 percent are not investing in products traditionally designed to manage risk, such as fixed income instruments and annuities. Just seventeen percent of respondents report using bonds and other fixed income products, followed by annuities and other insurance products (13 percent). Among the 49 percent of survey respondents who say they are managing their retirement portfolio’s risk with investments, about half are using cash instruments, making it the most popular investment category to manage risk.

“Lately, we are spending a significant amount of time talking with clients about risk management, but it’s important for people to realize that asset protection is often times just one part of the equation. In many cases, people also need to find ways to balance risk management with portfolio growth in order to build their assets and – at the least – outpace inflation,” said Bill Allen, CFP, vice president of Schwab Private Client Investment Advisory, Inc.

In addition, Allen noted that the survey found that only 11 percent of Americans plan to rebalance their retirement portfolio in the next six months. According to Allen, key considerations investors should remember to help protect against risk and stay on track with their retirement goals include:

  • Portfolio rebalancing. Investors should check on their portfolios at least once a year, and more frequently if there has been strong positive or negative market movement in a particular quarter. Rebalancing puts your portfolio back in line with the intended asset allocation goals and risk tolerance.
  • Stick to YOUR plan. There are a lot of asset allocation models and strategies to choose from but there is only one you. So having an appropriately diversified asset allocation across equities, fixed income and cash based on your particular risk tolerance and objectives is key, and shouldn’t change just because the market does.
  • Have a “total return” approach. Investors are avidly looking for yield in today’s interest rate environment. Remember two things. First, yields tend to correlate to risk, so make sure you find the right balance. Second, yield is just one element of a total return strategy that should also take into account capital gains. Look at whether combining these components in a total return approach could work for your long-term investments needs.
  • Know when to seek advice. No retirement portfolio should ever be on autopilot. If you don’t have the bandwidth to properly monitor and manage your portfolio, consider visiting one of our branches across the country to talk with a financial consultant about your retirement goals.

About the Survey

The Charles Schwab Retirement Survey was conducted by Koski Research between May 3 and 7, 2012, using Random Digit Dialing of listed and unlisted numbers, with 20 percent of the sample reached by cellular/mobile phones. Quotas are set to ensure reliable and accurate representation of the entire U.S. population ages 18 and over. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. The study’s margin of error is +/- 3.1 percent.

About Charles Schwab

The Charles Schwab Corporation (NYSE:SCHW) is a leading provider of financial services, with more than 300 offices and 8.7 million active brokerage accounts, 1.5 million corporate retirement plan participants, 808,000 banking accounts, and $1.83 trillion in client assets as of April 30, 2012. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC,, and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Advisor Services division. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides trust and custody services, banking and mortgage services and products. Investment products offered by Charles Schwab & Co., Inc. are not insured by the FDIC, are not deposits or obligations of Charles Schwab Bank, and are subject to investment risk, including the possible loss of principal invested. More information is available at and (0512-3521)

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© 2012 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

Disclosures: Diversification and rebalancing cannot ensure a profit or eliminate the risk of investment losses.


Charles Schwab
Dan Mahoney, 415-667-0507
Rebecca Neufeld, 415-229-7674

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