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Nearly one-fifth (18%) of individuals surveyed by Bank of America have prematurely withdrawn assets from their retirement accounts because of recent economic conditions. The leading reasons for the premature withdrawals are to pay off credit card debt (26%), to pay down mortgages (22%), and the loss of a job (22%). The 2008 Bank of America Retirement Savings Survey was conducted by telephone in early November 2008 with 750 people from the general public and 250 affluent individuals who have between $100,000 and $3 million of investable assets.
“Today’s economic conditions are clearly having a significant impact on Americans’ near-term financial behavior, causing many to be or to believe they are in a less secure position to work toward their long-term retirement goals,” said Craig Averill, personal retirement solutions executive for Bank of America. “Based on this survey, it appears that many Americans are not fully able to save what is needed to retire as they had planned, and some are tapping into their nest eggs to meet more immediate financial needs.”
Despite the recent economic turmoil, 68% of the general public and 62% of the affluent individuals have not changed the way that they save, invest, or manage their retirement assets in the last three months. In addition, 44% of the general population and 41% of the affluent individuals do not plan to change the way that they save or invest for retirement in 2009. However, 16% of the general population indicate that they might have to forgo making retirement savings contributions next year. “Lack of change in the way people are saving and investing for retirement may indicate that they’re ‘staying the course,’ with confidence in their long-term financial plans and investments,” said Averill. However, he noted that this lack of change could also be a sign of Americans “not knowing exactly what to do besides reduce spending and continue to watch as their retirement assets diminish.”
The use of liquid accounts, such as savings accounts, where cash can be accessed quickly and easily, was reported by 44% of the general public and 61% of the affluent individuals, the survey found. More than two-fifths (43%) of the general population and more than one-third (36%) of affluent Americans said that the current economic conditions have pushed back their expected retirement age. The survey found that participants also are considering lifestyle changes when they retire in response to the recent economic turmoil.
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