Client & Advisor Update - May 11, 2009

Depends on who you ask

Age, race, economic level color degrees of optimism

Nearly four out of 10 Americans — or 39% — said they expect it’ll take at least three years to recover the value of their retirement savings that were lost in the downturn.  A full 20% believe the recovery will take fewer than three years, but 24% predict a full recovery of losses would take at least six years. Only 4% expect their savings to recover by 2010.  The remaining 13% weren’t saving for retirement, according to a survey from St. Louis-based Edward D. Jones & Co. LP.

The survey also found that people’s expectations of the market recovery differed based on their background.  For instance, it showed that middle-aged Americans anticipate that it will take them longer to recover, compared with the overall sample.  Fifty-four percent of Americans ages 45 to 54 believe it will take more than three years to recover from losses in retirement savings.

Meanwhile, the study showed that 45% of Hispanics expect it will take longer than three years to recover their savings, compared with 35% of African-Americans.

According to the survey results, 52% of respondents who earned $75,000 to $100,000 believe it will take more than three years to recover their retirement savings, compared with 25% of individuals who earned less than $35,000.

“No one can predict when the market will recover,” Alan Skrainka, chief market strategist at Edward Jones, said in a statement.  “If you look at similar declines in the stock market, the average recovery is two-thirds in two years, and full recovery in five years. [But] history is not always a guide, and this recovery could take longer.”

The survey was based on 1,000 telephone interviews of U.S. adults conducted April 23-26.

The views and opinions expressed are not necessarily that of VSR. This commentary should not be considered individual investment advice.