The mass-affluent are getting more serious about long-term financial objectives, although there is still a major gap between their retirement savings and retirement goals.
Retirement investing has moved back to the top priority again for mass-affluent Americans while paying down debt slides to second place, according to the semi-annual Merrill Edge Report released Monday, Oct. 28. The report defines mass-affluent as people with $50,000 to $250,000 in total household investable assets.
This groupwhich numbers about 33 million householdsis finding its financial equilibrium, Merrill Edge said in a press release. After the financial crisis, this segment focused primarily on paying down debt as its top financial concern. But now, investing for retirement is the top concern for 39% of respondents while paying down debt is the second concern at 26%.
Moreover, the mass-affluent has suddenly become aggressive as 77% of respondents are looking to actively grow their retirement nest egg. Indeed, they still have a lot of ground to cover as the average goal is $736,000, much higher than the average savings of $161,000.
Its encouraging to see that mass-affluent investors are switching to a long-term view of their finances and that they are looking to place their debt behind them, said Alok Prasad, head of Merrill Edge, in a press release. As the economy continues to come out of the downturn that began in 2008, this is a good time for both men and women to establish better money habits and set challenging, but realistic, retirement goals.
To be sure, the liability side of their portfolio is still very much in mind, as 44% listed paying down debt as their top financial accomplishment in the past year.
A final piece of good news for the advisors who cater to the mass-affluent: There are a lot of potential clients. Just 40% of the respondents said they get financial information or guidance from advisors while 28% get it from family and friends. This metric remains consistent with the last installment of the Merrill Edge Report from earlier this year.