Investors optimistic as they rebuild savings

November 11, 2009 9:00 AM EST

Survey finds 73% of retirees looking for new ways to grow their assets

NEWARK, N.J.--(BUSINESS WIRE)-- American investors are optimistic they will recoup losses from the recession and are exploring new options to build their retirement savings, according to a report released today by Prudential Financial, Inc.

According to the report, The Impact of the Market Crisis on Retirement Preparedness, Americans are concerned--but have not pressed the panic button--when it comes to rebuilding their retirement nest egg. Prudential surveyed 1,001 Americans age 45 to 75 with $100,000 or more in retirement savings. The survey was administered online and had a margin of error of +/-3.1 percent. The survey found that, following the market turmoil:

    --  Investors estimate they lost more than a third of their assets.
    --  Yet, 62 percent of workers think they can grow back the money they lost
        in their workplace retirement plans, and more than two-thirds of this
        optimistic group thinks it will be within five years.
    --  Eight in 10 acknowledged a need to start rebuilding their savings after
        the recession.
    --  73 percent of retirees say they are exploring new ways to grow their
        assets.
    --  Three-quarters said a product with guarantees for lifetime income,
        protection of principal, and opportunities to lock in market gains would
        be important or nice to have as part of their portfolio.

"There's no doubt that investor confidence suffered over the last year, which left Americans a bit shaken as they absorbed the shock to their account balances," said Jacob Herschler, senior vice president of Business Development for Prudential Annuities. "As a result, many investors have shifted their focus from that frustration to planning. They are using what they've learned from this period to carefully evaluate their next financial moves so that they can rebuild their retirement savings."

Conservative investor behavior could limit growth

Although most investors are optimistic they can grow back the money they lost, they are, paradoxically, shying away from aggressive portfolios. In fact, 7 in 10 say that being too aggressive with investments is riskier than being too conservative, which is in stark contrast to just two years ago when respondents were evenly split on the same question. Unfortunately, conservative investing likely won't provide investors with the growth or income they need to last through retirement.

Looking ahead

Investors admit to exploring numerous tactics to deal with the financial and emotional challenges they are facing from the recession. Many have made immediate sacrifices, such as cutting back on spending (54%) and postponing retirement (41%).

For the longer term, however, Americans are re-evaluating their overall approach to retirement planning. They are assuming greater accountability and seeking new options including guaranteed income products. In fact:

    --  77% of those surveyed said they will pay more diligent attention to
        their investments following the recession.
    --  Two-thirds would likely pursue a solution that offered guaranteed
        income, including those individuals who have access to guaranteed income
        through other sources (e.g., Social Security or pensions).
    --  Seven in 10 said they would put money back into the stock market if
        protected by such income guarantees.

"Many Americans lack the confidence that they have saved enough to take them through retirement and, therefore, recognize that they need to become more responsible for their own retirement planning," Herschler continued. "But they also feel that they don't have the experience and product knowledge to be successful in making their money last, which means that financial advisors must play an even more critical role for clients who want to explore new strategies on their own."

That shift is driving many investors to rely primarily on their own research for financial guidance - especially via the Web (48% of respondents today vs. 37% before the market decline). However, financial advisors are still seen as viable sources of information, especially for more complicated products:

    --  Two-thirds would trust a financial professional for information and
        guidance on how to best manage their retirement savings and investments.
    --  66% said their preference for learning more about guaranteed income
        would be by talking to a financial professional.

"While the interest is high, many of these products are complicated," Herschler continued. "Companies that manufacture these products have to do a better job of educating investors about guaranteed income solutions so clients can go to their advisors armed to discuss options available to them."

Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $580 billion of assets under management as of June 30, 2009, has operations in the United States, Asia, Europe, and Latin America. Leveraging its heritage of life insurance and asset management expertise, Prudential is focused on helping approximately 50 million individual and institutional customers grow and protect their wealth. The company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. Prudential's businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. For more information, please visit http://www.news.prudential.com/.

Variable annuities are appropriate for long-term investing and designed for retirement purposes. Annuities are subject to investment risk. Your principal value may decline.

Variable annuities are issued by Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of New Jersey), Newark, NJ, and by Prudential Annuities Life Assurance Corporation, Shelton, CT, and distributed by Prudential Annuities Distributors, Inc., Shelton, CT. All are Prudential Financial companies and each is solely responsible for its own financial condition and contractual obligations.

All guarantees, including optional benefits, are backed by the claims-paying ability of the issuing company and do not apply to the underlying investment options. Optional benefits have certain investment, holding period, liquidity, and withdrawal limitations and restrictions. The fees are in addition to fees and charges associated with the basic annuity. Please see the prospectus for additional information.

Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Your licensed financial professional can provide you with complete details.

Investors should consider the contract and the underlying portfolios' investment objectives, risks, charges and expenses carefully before investing. This and other important information is contained in the prospectus, which can be obtained from your financial professional. Please read the prospectus carefully before investing.

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    Source: Prudential Financial, Inc.

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