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Investors Confident They Will Have Enough Money To Retire But Fear Catastrophic Event Could Derail Their Plans

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SOURCE Legg Mason

Take a 'Realtirement' Approach

NEW YORK, May 12, 2014 /PRNewswire/ -- According to a new survey of 500 affluent U.S. investors released today by Legg Mason, 88% are confident they will have enough money to live the lifestyle they want in retirement and 86% are confident in their ability to retire at the age they want.

But that confidence doesn't outweigh their fears. In fact, even confident investors said they fear a number of issues that could sidetrack their success. Their top five fears are:

1.    Having a catastrophic event that uses up my retirement funds
2.    Living longer than my retirement funds last
3.    Government not following up on obligations
4.    Not saving enough for my retirement
5.    Low interest rate environment

"We fear the unpredictable, the catastrophic event that can decimate retirement savings," said Matthew Schiffman managing director and head of global marketing at Legg Mason Global Asset Management. "As a result, we encourage financial advisors and investors to take a realistic approach when planning for retirement. We call it 'realtirement' and it includes trying to anticipate the unpredictable.  For instance, have you planned for your long-term living situation?  What if you suddenly need assisted living or even greater care?  Are you prepared for that event? We all need to be."

Retirement the Primary Goal

The majority of U.S. investors surveyed said their primary goal of investing was to "provide for my own retirement" making it the top priority. Ranked in order of priorities, investors said:

1.    Providing for my own retirement
2.    Maintain my current lifestyle later in life
3.    Protect my wealth
4.    Grow my wealth
5.    Generate income for living expenses

The lowest priorities according to the survey respondents were those that primarily focused on leaving a legacy:

1.    Provide for my family after I am gone
2.    Protect my wealth for my children
3.    Provide for a family member's need
4.    Saving for a major purchase

Are investors making progress toward achieving their goals? The majority of those surveyed are but some are not. More specifically:

  • 41% of those aged 40-54 said they were not making progress toward "providing for my own retirement"
  • 46% of those aged 55-64 said they are not making progress toward "maintaining my current lifestyle later in life"
  • More than 4 in 10 (42%) said they are not doing very well in the progress they are making to "protect my wealth"
  • 53% of those aged 55-64 said they were not doing very well toward the goal "grow my wealth"
  • More than one third (36%) said they were not doing well in their ability to "generate income for living expenses" and the age group 55-64 stands out as having more respondents (42%) admitting to not doing very well.

Decisions that Impact Investing

Investors surveyed by Legg Mason identified the decisions they made that have had a positive impact on their investment success. The top five decisions are:

1.    Changed their spending habits so they could save/invest more
2.    Developed a financial plan
3.    Began working with or increased the role of my financial advisor
4.    Invested in products other than just stocks and bonds 
5.    Took a more global approach to investing

Advice to Next Generation:  It Will Be Tough, Start Young and Stick to a Plan

A significant majority (70%) of the investors surveyed believe the investment environment that future generations face will be more difficult than the environment investors face now.  Those between the ages of 55-64 are most likely to make this dire prediction, where 82% believe it will be more difficult for future generations.

Only 6% expect the future environment to be "easier" while less than one-quarter (24%) believe it will be about the same.

Asked what counsel they might offer the next generation facing this challenging future, investors offered the following top five pieces of advice:

1.    Start investing early in life
2.    Make sure you understand what you invest in
3.    Avoid short-term decisions based on emotions
4.    Make a plan and stand by it over time
5.    Employ a professional advisor

What advice would investors give the next generation when it comes to risk taking? Only 30% suggested that the next generation should be cautious about taking risk.

"Investors over 50 years old today have been through numerous market cycles so their insights and decisions are well tested," Mr. Schiffman added. "This sage advice may be suited for the next generation, but even seasoned investors can learn a thing or two from items on the list like to avoid short-term decisions based on emotions, and make and stick with a plan."

About the Legg Mason Global Income survey

The Legg Mason Global Income Survey was conducted among 4,320 affluent investors (minimum $200,000 in asset as measured in U.S. dollars) from 20 countries:  Australia, Belgium, Brazil, Chile, China, Colombia, France, Germany, Hong Kong, Italy, Japan, Mexico, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, United Kingdom, United States. The U.S. survey findings are from among 500 affluent investors. The online survey was conducted by Northstar Research Partners from December 2013 to January 2014.

About Legg Mason

Legg Mason is a global asset management firm with $673 billion in assets under management as of April 30, 2014. The Company provides active asset management in many major investment centers throughout the world. Legg Mason is headquartered in Baltimore, Maryland, and its common stock is listed on the New York Stock Exchange (symbol: LM).

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