Economy Fears Lead Affluent Boomers to Adjust Portfolios

May 6, 2008 ( - One in four affluent baby boomers turning 60 this year are changing his or her retirement plans and 40% are downsizing their lifestyles in response to the economic downturn, according to Bell Investment Advisors annual Affluent Boomer Survey.

A press release on the survey results said almost one quarter (23%) of affluent boomers say they are planning to change their investment strategy in preparation for a potential recession. Of those, the majority (69%) plan to invest in more conservative investments such as money market funds and bonds, while only 21% plan to invest more in stocks or stock mutual funds.

Though most report a plan to shift to more conservative investments, more than half (54%) said seeking higher returns is their primary goal for the next five years. “This finding underscores the fundamental lack of understanding many investors have about risk and return. Boomers will not achieve higher returns if they shift to more conservative investments as the survey findings suggest,” Jim Bell, founder and president of Bell Investment Advisors, said in the release.

The survey found almost 30% of affluent boomers say they have more financial stress now than they did six months ago, with affluent female boomers reporting more financial stress than men (35% vs. 24%). Of the one in four boomers who said they are changing their retirement plans due to the economy, more women (31%) than men (19%) indicated they are making changes.

Lifestyle changes cited by boomers surveyed include contributing less to charity (22%); cancelling, shortening, or postponing a vacation (21%); reducing retirement savings (18%); and postponing retirement altogether. Forty percent of respondents said they are reducing spending in response to the economy, and only 4% said they downsized housing.

Over a fourth (28%) of affluent boomers reported either they have either lost their job in the last 12 months or they know someone who is age 60 or over who has. More than one third (35%) of the most affluent boomers surveyed (those with more than $3 million earmarked for retirement) were affected by job loss, compared with just 24% of those with $1-3 million saved, and 30% of those with under a million saved for retirement.

The Affluent Boomer Survey was conducted by Opinion Research Corporation from April 1-6, 2008, among a random sample of 500 adults comprised of 250 men and 250 women who were born in 1948 and have investable assets of $1 million or more.

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