Asset Management

US Investors Are Wildly Optimistic About A Recovery

Thomas Coyle 23 September 2009

US Investors Are Wildly Optimistic About A Recovery

Despite a long recession and a stock-market decline that - a 56% rally since early March 2009 notwithstanding - has wiped out all broad gains since late 2003, an astonishing 78% of  US investors "expect their standard of living in retirement to be the same or better than it is now," according to Allianz Global Investors survey of 1,013 pre-retiree household financial decision makers with at least $250,000 in investable assets.

And it seems that these optimists are pinning their hopes on the stock market, with half of them viewing equities as the foundation of their financial security in retirement, and three quarters of them believing that the stock market will "bounce back and restore" all their portfolio losses. On average, US investors see a mean annual return of 9% as a reasonable expectation from stocks - and 81% of them think the asset allocations they now have in place will do the trick.

Most investors don't see inflation as a particular risk to their future comfort - and most of those that do feel they've built inflation-proof portfolios.

Meanwhile only 45% of advisors believe their clients have a realistic sense of what they'll have to have on hand to enjoy comfortable retirements.

"Despite this refreshing optimism, tremendous damage has been done and Americans now have a lot less accumulated for retirement than they did even a few short years ago,” says Brian Gaffney, head of distribution for Allianz Global Investors.  “Our survey reveals a need for all of us to honestly reassess our vision of retirement and to develop realistic and sustainable retirement savings models."

Fortunately, it seems that the worst downturn since the Great Depression has put a small dent in the yeah-I-know US mindset. An unusual number of investors are interested in learning - from actual professionals, mind you - about such things as generating income in retirement (72%), health-care costs (71%) and the grim possibility of outliving their nest eggs (62%). Overall, 55% of the investors surveyed say it’s a good idea to work with a financial advisor.

“Estimating health care costs and generating lifetime income are complex issues, so it’s not surprising that even relatively successful investors are seeking professional guidance," says Mr Gaffey.

Allianz Global Investors is the asset-management division of the German insurance giant Allianz. It had more than $1 trillion under management on 30 June 2009.

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