Seniors Fear Spending Retirement Income

BOSTON (TheStreet) -- Employer-sponsored plans are increasingly treated as "God-forbid" income sources, "to be tapped only as an absolute last resort under the most dire of circumstances."

That's among the conclusions drawn from national focus groups convened by Hearts & Wallets, a retirement and savings research firm based in Massachusetts and New Hampshire. The focus groups -- held in New Jersey, Dallas and San Francisco -- focused on investors having a minimum of $500,000 in investment assets and included preretirees and retirees.


" Many in the employer-sponsored plan side of the business would like to think of the 401(k) and 403(b) as the foundation from which financial security in old age will be drawn," the researchers wrote. "This may be true, but for many investors, it is a security blanket not to be touched; to tear into it would leave them vulnerable to the cold with nothing left to shield themselves. This attitude partly stems from the idea that money on which taxes have not yet been paid doesn't feel like 'my money,' and won't until 'Uncle Sam has been paid.'"

Older Americans -- at least those who took part in the study -- also view the future as "unknowable" and question financial planners who try to help control that uncertainty.

Trust also appears to have dropped to a new low for financial services institutions and advisers over the past nine months, according to the firm.

"Older investors are gun-shy on many levels," says Chris Brown, a principal of Hearts & Wallets. "Unlike market performance, a number of uncertainties can't be mitigated with asset allocation: the risk of illness and large medical bills; adult children's job security; the capriciousness of government actions, especially on taxes. Older Americans view financial services firms as suspect if they make promises to help plan for what can't be known."

If you liked this article you might like

10 Forces Conspiring Against Your Savings

10 Worst-Off State Pension Funds

10 Ways Your 401(k) Can Fail You

A Spy Kit for the Modern James Bond

Prep Your Portfolio for Disaster With a Stress Test