Baby boomers are shifting their investment priorities |

Baby boomers are shifting their investment priorities

Jeffrey Apps and Tracy Tutag

Are you a member of the baby boom generation? If so, you’re probably focused on paying your children’s college tuition, while at the same time, saving enough money to fund your own retirement. You may even be concerned about health and well-being of your parents or in-laws. Most likely you are balancing all of this while maintaining a full-time career. If this sounds like your personal profile, you’re not alone. In 1993, AXA Financial conducted its first Nest Egg Study to discover what financial and economic concerns baby boomers expected to encounter. We wanted to find out what you were doing to prepare for their future; if you had mapped out a plan and how close you were to achieving your goals. Ten years later in 2003, we turned out attention again to this important demographic group. In the latest study, we sought to determine how attitudes towards personal finances, setting priorities and achieving financial goals for yourself and your family have changed since 1993.Retirement on the horizonWhen we asked baby boomers in 2003 what their greatest economic concern was, 43 percent responded that their greatest concern was having adequate retirement resources. This was up from 26 percent in 1993. This is reflected in how they are setting their priorities. Compared to 10 years ago, more affluent baby boomers expect to assign a higher priority to providing a financial base for their retirement (55 percent in 2003 vs. 43 percent in 1993.) Fewer respondents cited balancing savings and financial security as their single greatest financial concern (only 9 percent in 2003 vs.17 percent in 1993.) This may indicate that many baby boomers believe that this area of financial management is under control.There are other indications that priorities are being rearranged. This generation, also known as the “sandwich generation,” now expects to assign a higher priority to providing for their parents or in-laws (19percent in 2003 vs. Only 9percent in 1993), than paying for their children’s educational needs. Having a plan helpsThe AXA 2003 Nest Egg Study results indicate that having a financial plan improves one’s chances of attaining financial goals. Those with a plan are more likely to achieve their goal for setting funds aside (86 percent of those with a plan vs. 74 percent of those without a plan) and believe they will achieve their goal of leaving an estate to their heirs (80 percent of those with a plan vs. 68 percent of those without a plan.) Those without a financial plan are more likely to say they did not try to save any money in the past year or two and report that they have made poor financial preparations.Saving to secure retirementBaby Boomers continue to recognize the importance of saving for their future. More than eight in ten have attempted to set aside some form of savings over the past year or two (84 percent in 2003 vs. 81 percent in 1993.) Results from the study also indicate that this group is utilizing more sophisticated financial products that offer diversity, long-term growth potential and tax-deferred benefits. The use of IRAs increased dramatically with 40 percent of the respondents in 2003 naming it as a primary investment compared with just 17 percent in 1993. The use of CDs or money market accounts as primary investments has decreased over the past ten years by 9 percent.In summary, over the past ten years, as baby boomers have approached retirement age, they have become more concerned with their financial futures. There are indications that priorities are being rearranged.Retirement savings plans are being created and savings are being set aside to provide for a secure retirement. Those who plan and prepare well may achieve the retirement lifestyle they seek. If you would like to learn more about what you can do to build or enhance your financial nest egg, please contact your financial professional.Jeffrey Apps & Tracy Tutag can be reached locally at 926-0601 ortracy.tutag@axa-advisors.comVail, Colorado

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