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Future Shock? Not for Earners and Retirees

Better Prepared than Others for Slump

Consumer confidence generally declines in an economic downturn, but retirees and those who generated their own wealth are less likely to feel nervous, according to two recent surveys.

Investors who earned their own wealth tend to have the greatest peace of mind about their finances during bumpy times, suggests the first survey, conducted for PNC Financial Services Group. Those people — rather than the many who dream of gaining millions through inheritance or lotteries — are also best prepared to survive an economic decline, that poll continues.
It also finds that 69 percent of Americans who have $500,000 or more in assets earned their wealth through work, business ownership or investments. Only 6 percent gained their wealth primarily through inheritance, and the remaining one-quarter attained their assets through both inheritance and earnings. The survey goes on to reveal that 36 percent of those who earned their own wealth are concerned about a recession and 77 percent agree with the statement “I feel I have a lot of control over my financial future.” Only 27 percent of those who gained their wealth through inheritance are concerned about a recession, but fewer of them (67 percent) than the earners say they feel they’re in control of their fiscal future.
Earners are also more willing to take risks with their investments, according to the poll. Asked to rank their risk tolerance, 39 percent of earners rated themselves moderate-to-high-risk investors (the uppermost two categories combined), compared with 21 percent of heirs.
Harris Interactive conducted PNC’s survey online among 1,509 adults in the United States in September and October 2007.
Another survey suggests that after a lifetime of earning money through work and investing, retirement brings the reward of greater confidence about one’s economic future.
In its fourth annual survey about attitudes toward retirement among adults between ages 55 and 70, Wachovia Corp. finds that 40 percent of retirees feel “very confident” they’ll have enough money in years to come, versus just 16 percent of nonretirees.
Only 28 percent of retirees say they worry about investing mistakes, compared with 43 percent of nonretirees. But a closer 42 percent of those who are retired say they’re afraid to put their savings in the stock market, versus 48 percent of nonretirees.
When asked how they feel about their future, more than half (55 percent) of retirees say they “often” feel confident, compared with 29 percent of nonretirees. A full 91 percent of retirees polled say they feel “confident” or “very confident” that they’ll have enough savings to last in retirement.
Worries about handling retirement finances tend to diminish with age, Wachovia’s poll suggests: Of all retirees surveyed, 84 percent characterize themselves as “not distressed” about managing their finances in retirement; that drops to 75 percent among younger retirees between ages 55 and 59.
What tops the list of concerns for all retirees is health issues: Deteriorating health, unexpected illness and the rising cost of health care are their greatest overall concerns.
And asked about their quality of life in retirement, 52 percent say it’s “better than expected,” and 37 percent say it’s about “as expected.”
Richard Day Research conducted Wachovia’s survey online during December 2007 among 2,100 U.S. adults.

Kate Fitzgerald is a free-lance writer based in Scottsdale, Ariz., specializing in business and technology.

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