[December 01, 2014]

Americans Say Market Uncertainty Drives Preference for Retirement Guarantees

Although markets enjoyed a steady climb throughout much of 2014 generating strong results for many consumers, significant downturns in August and October have proven that market uncertainty is a persistent reality that can disrupt Americans' attitudes about saving for retirement, according to the Allianz Life 2014 Market Perceptions Study*. As a clear indication of their low tolerance for market uncertainty, the vast majority of survey respondents said they preferred financial products with guarantees (78%) over products with higher growth potential but the possibility of losing value (22%).

This opinion aligns with their current attitude about retirement strategies, where four of five respondents (80%) agreed that it's important to have a guaranteed source of income in retirement, well ahead of those who indicated they are comfortable with current market conditions and ready to invest now (28%). When asked what factors would prevent them from investing for their retirement today if they had extra cash available, four in 10 respondents said "fear of market uncertainty," ahead of "lack of reliable financial advice/guidance" (26%) and "today's low interest rates" (22%).

"Hands down, Americans are saying their retirement savings strategy must include products and choices that offer guarantees, even though equity markets have performed well this year," said Allianz Life Vice President of Consumer Insights Katie Libbe. "It appears that the recent threat of volatility is enough to keep many consumers away, particularly those who are focused on saving for retirement."

Extra Cash - What Would You Do?

When asked what they would be most likely to do if they had extra cash today to purchase a financial product for their retirement,

• 39% said the would put extra cash into a product that offers a balance of potential growth and some level of protection (up to 10% growth, a level of protection if the market goes down more than 10%).
• 19% said they would put extra cash into a product with modest potential growth (2-3% growth) and no potential loss.
• 19% said they would put extra cash into a savings account earning little or no interest.
• 12% said they would hold their extra cash and wait for the market to correct before purchasing a financial product for their retirement.
• 11% said they would put extra cash into a product with high growth potential and no protection from loss.

In fact, when asked about the most important action to take 5-10 years before the start of retirement to help ensure a more protected retirement, more respondents (41%) said putting some of their money into a financial product that provides a guaranteed stream of income in retirement. Only 12% of respondents said the best strategy is to put some of their money into equities to build up retirement assets.

As previously noted, when given the choice between two financial products - one offering 8% return with the possibility of losing value/vulnerable to market downturns and one with a 4% return but guaranteed not to lose value - 78% of respondents chose the guaranteed product.

Concern: Enough to Cover Basic Living Expenses

What are their biggest concerns surrounding retirement? "Not being able to cover my basic living expenses," (34%) and "outliving my income" (20%) were the top responses. Other issues that respondents noted they were afraid of in retirement include "paying for healthcare costs," (17%), "seeing retirement savings drop significantly in value," (12%), "keeping up with inflation," (12%) and "managing any tax increases," (4%).

"Concerns about covering basic expenses and outliving money in retirement are clearly driving more interest in solutions that can address these topics while still protecting against market losses," added Libbe.

About Allianz Life

Allianz Life Insurance Company of North America, one of FORTUNE's 100 Best Companies to Work For in 2014, has been keeping its promises since 1896. Today, it carries on that tradition, helping Americans achieve their retirement income and protection goals with a variety of annuities and life insurance products. As a leading provider of fixed index annuities, Allianz Life is part of Allianz SE, a global leader in the financial services industry with 148,000 employees worldwide. More than 78 million private and corporate customers rely on Allianz knowledge, global reach, and capital strength to help them make the most of financial opportunities.

*The Allianz Life 2014 Market Perceptions Study was conducted by Ipsos via their online iSay/Ampario Panel from September 12-16, 2014 with 791 panel respondents ages 18-55+ who identified as NOT retired, and was commissioned by Allianz Life Insurance Company of North America.

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