August 15, 2006

Many Retirees Don’t Invest Appropriately

BOSTON (Reuters) - Many wealthy Americans with nest eggs of $1 million may not have enough money for their golden years because they do not invest appropriately after leaving their jobs, a poll released on Tuesday shows.

The survey, commissioned by Bell Investment Advisors and conducted by Opinion Research Corporation last month, found that 38 percent of the 500 60-year old high net-worth respondents said they would invest more conservatively during retirement.

This may be a mistake, however, because people tend to live longer and often have to fund retirement for two or three decades, Jim Bell, founder and president of Bell Investment Advisors said.

"If people will spend 30 years in retirement they will need enough capital to invest for the sake of growth to keep their purchasing power intact," Bell said.

Traditionally, retirees tend to shift their investments to safer, fixed income investments, Bell and other financial advisers have said. However, bond returns may not be robust enough to let portfolios grow adequately enough to fund many years of retirement, the financial advisers said.

The poll shows that only 29 percent of the respondents reported investing in the stock markets.

It was released at a time when many other research studies have also shown that Americans -- who long relied on increasingly scarce company pensions for retirement income -- face gloomy prospects because many have not saved enough to live comfortably after they leave their jobs.

Recent figures released by Fidelity Investments, the world's biggest mutual fund company, show that most people will have to live on 43 percent less money after they retire.

The poll released on Tuesday also shows that many wealthy Americans tend to decrease the size of their retirement savings by being very generous with their children. Some 60 percent of the respondents said they plan to pay for all or part of their children's education, while 43 percent plan to help with down payments on houses, the poll found.