Survey Shows Investing Differences Among GenXers, Boomers, Matures

July 14, 2004 (—Across all three age groups, GenXers, Boomers, and Matures, the average annual amount contributed to retirement savings has increased 18% since 2003, now at $10,164, according to the Fourth Annual Across Generations Survey released today by the MainStay division of New York Life Investment Management LLC (NYLIM).

Top financial concerns for Boomers and Matures were sustaining their current lifestyle (40% and 73%, respectively) and paying of personal debt (35% and 21%, respectively).   Although most GenXers (74%) don’t think the government will provide them with enough financial assistance when they retire, the survey showed that 64% expect their standard of living in retirement to be greater than their parents.

Maybe to help plan for these expected lifestyles, more investors of all age groups (45% of GenXers, 42% of Boomers and 38% of Matures) believe that they “need the help of professionals when it comes to managing (their) money.” Nearly half of all groups, 41% of GenXers, 46% of Boomers, and 54% of Matures work with an advisor, with 18% of GenXers, 13% of Boomers, and 8% of Matures anticipating going to an advisor for help in the next three to five years

Of retired Boomers and Matures, approximately one-fifth have gone back to work (22% of retired Boomers and 20% of retired Matures), citing boredom as the cause.

All groups increased their non-retirement asset investments; Baby Boomer and Mature investors who are invested in financial products increased in the past year 22% and 12% to 79% and 67%, respectively, but GenX investors only increased 2%, from 73% in 2003 to 75% in 2004.   However, the survey said that the larger jumps in the Baby Boomer and Mature groups are because those demographics slowed investments during the economic downturn and are now coming back into the market, while GenXers continued to invest during the 2002-03 downturn, a news release said.   The survey also showed that on average, the GenXers and Boomers surveyed save approximately $16,100 per year in non-retirement savings, while Matures put away $12,700 annually.

Although fewer respondents (57%, down from 65% in 2003) said they used real estate as part of their comprehensive financial plan, nearly one-third (32%) of GenX investors plan to add real estate to their portfolios in the next three to five years, as do 18% of Boomers and 16% of Matures.

Investor confidence has increased in the last year, with 42% of GenXers, 39% of Boomers and 49% of Matures noting that the recession is over, and only 19% of Boomer and 18% of Mature investors identifying themselves as “conservative.”

Additionally, nearly all the survey respondents (90%) said their financial situation was very or somewhat secure, with most (72%) saying they were confident that if they or their spouse were to die or become disabled, their family would be financially stable.

Among investors who reallocated assets over the past year, differences were seen in how each group managed liquid assets.   More than half of all groups added equities: Matures (67%) Boomers (63%), and GenXers (53%).   Greater differences were seen among those who added cash: 34% of GenXers added cash, compared to 26% of Boomers and 14% of Matures, the survey reported.   According to the survey, in the future, more Baby Boomers (15%) plan to add cash than do Mature (13%) or GenX investors (12%).

Investors have concerns about both saving for and funding college.   Twenty-nine percent of GenXers and 22% of Boomers expect education costs to be out of their financial reach by the time their children/grandchildren are ready to attend college and so, 58% of GenXers are “very” or “extremely” concerned about college funding, the release said.   Additionally, 56% of Matures, 23% of Boomers, and 7% of GenXers do not plan on funding a portion of their children/grandchildren’s education. Among those who do expect to contribute, the average planned donation is relatively small — only $20,300 for Matures and $32,300 for Boomers, the news release reported.

Of those GenXers and Boomers saving currently, total planned contributions of $34,200 for GenXers and $32,300 for Boomers will most likely not make a significant dent in anticipated six-figure college costs. Additionally, only 30% of Matures are currently saving for their grandchildren’s education.

MainStay’s Across Generations Survey (2004) was conducted by an online research firm during the spring of 2004 and polled 1,504U.S.residents with total net worth of $100,000 or more ages 23 to 71 on their investment attitudes, behaviors, objectives and priorities.