How the Economic Crisis is Affecting Future Plans

April 2009

The impact of this economic crisis is different than previous recessions and market dips. The very companies that have formerly been considered as the safety pillars of our financial system are perceived as the creators of the downturn.

The largest impact of the economic crisis for many households is on their retirement. For those individuals who have not yet retired, one-third indicates that they will delay their retirement date. The biggest impact is on those who are within 5-10 years of retirement (primarily Baby Boomers). Forty-five percent of these households believe they will have to delay their retirement.

In addition to the retirement plans of these households, the overall asset allocation of their investment portfolios has changed or will change in the next few months. Forty-two percent of Millionaire households have already changed their investments. Thirty-nine percent plan to change their investments in the next few months. Overall more than 80% of Millionaire households have changed or will be changing their investment allocations. Additionally, 29% are saving less than they did before the crisis.

Almost half of Millionaire households will be moving to cash-based investments. Bonds are the second most popular investment choice at 36%.

The economic crisis has impacted the short-term financial plans of nearly half (49%) of all Millionaires. Some (23%) are even worried about losing their job or maybe their spouse losing a job. The biggest implications are changes to their spending habits. Forty percent are changing or delaying vacation plans, one-third are putting off the purchase or lease of a new automobile and the crisis is impacting other areas including paying tuition, changing savings rates or delaying the purchase of a second or vacation home. Thirty-eight percent indicate the crisis will impact their charitable giving.

While the impact of the crisis on short-term financial plans is dramatic, more than half of Millionaires (51%) indicate that the crisis will have an impact on their long-term financial plans as well. The most dramatic example of this impact is the number of individuals who believe they will have to delay their retirement due to the financial crisis.
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