Pessimism may be good for savings accounts
September 26, 2011
A recent study indicates that younger investors are especially concerned about their financial futures. Could this pessimism actually be a good sign for the future course of retirement saving?
Concerns higher among younger investors
The study in question was conducted by the Spectrem Group and compared concern levels of the general population with those of people aged 54 or younger--that is, 10 or more years away from retirement age.
The precentage of respondents who said they were worried about a particular aspect of their financial futures was higher in the younger age group for each of the five categories surveyed. The areas of concern people were asked about were rising interest rates, losing a job, financing education, getting adequate financial advice, and meeting short-term obligations.
Good news/bad news explanations
Why are people with more time until retirement especially worried? Well, you could put a positive or a negative spin on this.
The positive spin would be that younger people have been taught a valuable lesson by the financial crisis and the mistakes of their older peers. They understand that personal finance is serious business, and this will lead them to focus on it earlier and more diligently than many of the early baby boomers have done.
The more cynical explanation is that the younger you are, the more there is to be pessimistic about. Those with fewer years in front of them have less to plan for, and thus less to worry about.
A curious view of interest rates
An curious aspect of the study was that 52 percent of the overall respondent population, and 55 percent of the 54-and-under age group, cited rising interest rates as a concern. This suggests that most people view themselves more as borrowers than as savers. With rates on savings accounts, money market accounts, and CDs near zero, anyone who planned on being a net saver over time should be rooting for interest rates to go up.
This survey suggests most people view themselves as net borrowers, who would root for lower interest rates. That's not an optimistic view of the financial future!
