Maybe older dogs don't mind new tricks after all.
According to a new poll issued by SecurePathSM by Transamerica, a service of Transamerica Retirement Management, Inc., 65 percent of working Americans age 50 and above are becoming more comfortable with change and uncertainty as they grow older. In fact, half say they are at their best during times of change, and just as many say that change is exciting.
The new national study, conducted by GfK Roper Public Affairs & Media, finds that attitudes toward change in general can serve as a way of understanding different groups of pre-retirees. In fact, the study identified four key segments of pre-retirees based on their change profiles: Venturers, Adapters, Anchoreds, and Pursuers.
"The study certainly contradicts many long-held beliefs that as we grow older, we become more reluctant to change," observed Will Prest, chief marketing officer of Transamerica Retirement Management, Inc. "The findings are encouraging, particularly in an uncertain economic environment, as they indicate that many pre-retirees are confident in their ability to cope even in challenging times."
Several themes about pre-retirees emerged from the study. First, while pre-retirees are not daunted by retirement uncertainty, they also aren't expecting too much. For example, 73 percent say they will handle the change and uncertainty associated with growing older well, and 66 percent are confident that even with the uncertainty associated with retirement, everything will work out.
When asked about their retirement goals, most pointed to financial needs: - having a steady monthly income, 90 percent
- having good health insurance, 88 percent
- having enough money to pay for medical bills if they become sick, 85 percent
These goals easily beat out the desire to travel frequently (50 percent), afford to buy a house or apartment (34 percent), or leaving something for their children when they are gone (39 percent). In fact, 68 percent plan to be working in some way as they age.
Second, the gap remains between personal optimism and financial realism. Overall, pre-retirees have a positive and excited view of their future, as 63 percent look forward to retirement and 56 percent feel this transition will be easier than other life-changing experiences. But while they are psychologically prepared for retirement, they aren't necessarily financially prepared for it. For instance, 61 percent cite Social Security as their main source of expected income during retirement, even though they've been warned that this government benefit may not survive their retirement years.
Third, risk is more attractive in theory to pre-retirees than in practice. When asked about their personal philosophy regarding finances and money, 58 percent can relate to the notion of "Nothing ventured, nothing gained," and 48 percent agree with "No risk, no reward." Yet when asked where they actually prefer to keep most of their savings as they age, 54 percent choose guaranteed, safe investments even if they don't earn high returns.
When the risk trade-off necessary to achieve higher returns is made clear, however, slightly fewer choose the safer route. When given the choice to select between an investment with higher risk but a potentially higher return, or a low risk, lower return option, 36 percent prefer the low-risk path and 28 percent choose the high-risk option. The rest fall somewhere in between.
"Pre-retirees may be worried about risk in their overall retirement plan but also acknowledge its role," Prest said. "Understanding their change profiles will help them to bridge the chasm between fear and need as they determine the appropriate level of risk for their assets, based on their current financial reality."
Prest is referring to the four profiles of pre-retirees that emerged from the study, which researchers say offer a new way to understand the attitudes of this group of Americans.
Prest believes that reaching the goal of financial preparedness for retirement can't happen without first understanding the psychological barriers to getting there. - Venturers relish change, consider themselves in control of their lives, and look forward to retirement. One word of caution for this group: they need to be careful not to be overconfident about their level of preparedness.
- Adapters find change both stressful and exciting. Many feel they will be in control of their retirement and are confident they will handle the transition well. However, their tendency toward consistency, coupled with their confidence, makes them less likely to aggressively plan for the future or seek out opportunities to maximize retirement savings.
- The Anchored also strive for consistency but are worried about security. Clinging to consistency may be why they feel in control, and to a certain degree this works for them. However, they often shy away from monetary risks and feel they are at their worst when undergoing periods of change. This apprehension towards change negatively affects their confidence in their retirement savings and their investing and may lead them to be less prepared for retirement.
- Pursuers crave change but are not confident about their future. They also have mixed feelings about control: sometimes the feel they control their lives, and other times they feel life controls them. Their mixed feelings about change and experiences with change create a lack of confidence in their abilities to handle investing or retirement. In fact, as a group they are the most likely to say they will continue working instead of retiring.
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