U.S. Investors Need $2.5 Million For Retirement

NEW YORK, March 9, 2015 /PRNewswire/ -- According to a recent Legg Mason survey, U.S. investors said they will need an average of $2.5 million in retirement to enjoy the quality of life they have today.

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The majority (72%) said their primary goal of investing was to "maintain my current lifestyle later in life." Asked if they were making progress toward this goal, almost four in ten (38%) said they were not doing well or only doing "somewhat well" at best, and only 40% said they were "very confident" in their ability to "retire at the age I want to," while 60% were either not confident or "somewhat confident" at best. 

Investors Spend 475 Hours or More Worrying About Money Each Year

Perhaps as a result, investors surveyed said they spend, on average, one hour and twenty minutes each day thinking or worrying about money. That amounts to nine hours each week and a total of 475 hours over the course of one year. Further, 10% of all investors spend two to three hours each day thinking or worrying about money – that's between 730 and 1,095 hours annually.

"People are spending on average 20 full days each year worrying about money," said Matthew Schiffman, Global Head of Marketing for Legg Mason. "That's a lot of time and a lot of stress, which is why we encourage investors to share their concerns with their financial advisors and create a financial plan that anticipates their needs both now and in retirement. Having a plan could give investors the peace of mind they need so they can worry less.  Imagine what they could do with the 475 extra hours they'll get back each year."

Catastrophe, Longevity, and Income Are Top Concerns

The top three issues investors fear could prevent them from living the lifestyle they want later in life are:

1. Having a catastrophic event (i.e. illness, injury) that uses up my retirement funds
2. Living longer than my retirement funds last
3. My income won't keep up with inflation.

As previously reported by Legg Mason, having income-producing investments is a priority for more than 80% of investors with most investing in equity income funds, investment grade bonds, and high-yield bonds to meet their income needs.

"Despite low levels of inflation, the challenges of generating income in an uncertain rate environment are weighing on investors," added Schiffman.  "To help alleviate this concern, we recommend that investors look beyond traditional fixed income and equity asset classes to enhance the diversification and resilience of their income-producing assets." 

Average age: 58; Average Savings in Retirement Plan: $385,000

Seventy percent of respondents said they had a defined contribution plan. In those plans, investors have an average of $385,000 saved.

"The average age of the investors we surveyed was 58, and they told us that on average they have less than $400,000 saved in their DC plans," Mr. Schiffman said.  "Given their ambitious goals, investors hopefully have considerable savings elsewhere, such as significant equity in their home or other investment accounts, where their asset allocation is designed to help them achieve their long-term goals. Otherwise, reaching their $2.5 million goal could be extremely challenging."

Investor Revelations: Willing to Sacrifice Today for Better Tomorrow

Given their ambitious financial goals, it's encouraging that 72% of investors said they are happy to sacrifice now to have enough money later in life. Investors also admitted:

• 42% expect to cut back on their lifestyle in retirement so they don't out-live their assets
• 31% will need more money in retirement but are afraid to take the investment risk to get there
• 30% can save more, they just don't
• 26% have more debt than they should.

If they lost their job today, 21% of affluent investors said they would have a hard time paying their bills in six months.

If they could invest all over again, more investors (46%) said they would start investing sooner. One-quarter said they wouldn't do anything differently, while 14% said they would take more risk.  Just 9% said they would take less risk.

Investor Self-Confidence Up

Investors are showing a jump in self-confidence regarding their abilities as investors.  According to the survey, more investors said they were "very confident" in the following categories than in 2014:

About the Legg Mason Global Investment Survey

The U.S. portion of the Legg Mason Global Investment Survey was conducted among 458 affluent investors with a minimum of $200,000 in investable assets not including their home. The online survey was conducted by Northstar Research Partners from November 2014 to January 2015.

About Legg Mason

Legg Mason is a global asset management firm with $709 billion in assets under management as of December 31, 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).

All investments involve risk, including loss of principal. Past performance is no guarantee of future results.

Survey results are not intended to be a forecast of future events, a guarantee of future results, or investment advice and are not intended and should not be relied upon as the basis for anyone to buy, sell or hold any security. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional.

Equity securities are subject to price fluctuation and possible loss of principal. International investments are subject to special risks including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Fixed income securities involve interest rate, credit, inflation and reinvestment risks; and possible loss of principal. As interest rates rise the value of fixed income securities falls.

@2015 Legg Mason Investor Services, LLC. Member FINRA, SIPC. Legg Mason Investor Services, LLC is a subsidiary of Legg Mason, Inc.

INVESTMENT PRODUCTS: NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE

SOURCE Legg Mason

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