“Our glass is half empty” — why your clients are worried

investmentnews.com:

A recent study conducted by BlackRock, the global money manager with $9.4 trillion in assets, has revealed a concerning trend among participants in U.S. retirement plans. Over the past two years, there has been a significant increase in pessimism regarding their ability to save for retirement. Economic anxiety is on the rise due to factors like high inflation and volatile markets.

According to the report, the number of U.S. retirement savers who feel they are “off track” has more than doubled since 2021, reaching 24%. Conversely, those who feel “on track” have dropped by 13 percentage points from the peak in 2021 to 56%, marking the lowest level since the survey’s inception eight years ago.

The impact of economic conditions is pushing nearly 30% of all retirement savers to consider extending their working lives. With last year’s poor performance in equity and bond markets, combined with higher interest rates, many individuals are now uncertain about where to invest their savings.

One notable group experiencing a significant shift in confidence is the younger workers, with 31 percent of them expressing they are off track in terms of their retirement plans. This raises concerns that they may lose faith in long-term savings vehicles like the 401(k) and reduce their contributions.

Anne Ackerley, the head of retirement at BlackRock, highlighted that Gen Z is particularly affected, with almost three-quarters of them admitting they don’t know how to invest and are looking to their employers for guidance. In an interview with Yahoo Finance, she also revealed that worryingly, “60 percent (of Gen Z) said they would consider selling during a market downturn.”  Baby boomers, however seem much more used to market movements, with only