Message #4 From:
NewsBot Date: December 19, 2006 02:00:00 AM
AGE News Despite Nest Egg Score Improvement, Discretionary Spending May Be Sabotaging Nest Egg Growth
ST. LOUIS--(BUSINESS WIRE)--As Americans fret over sluggish home sales, war and politics, the A.G.
Edwards (NYSE:AGE) December 2006 Nest Egg Score and survey data show a
remarkable disconnect between positive economic indicators and public
perception when it comes to saving and investing. According to the A.G.
Edwards Nest Egg Score, conditions for building a nest egg continue to
improve – but Americans are not taking
advantage of these opportunities.
The December 2006 A.G. Edwards Nest Egg Score is 637, demonstrating a
six-point increase from the September 2006 Score and marking four
straight quarters of a “fair”
rating. The quarterly A.G. Edwards Nest Egg Score is a proprietary
analysis of 12 factors that influence the ability of U.S. adults to
build wealth, including savings rate, wealth-to-income ratio, cost of
living and the home equity rate.
According to government and survey data used to calculate the A.G.
Edwards December 2006 Nest Egg Score, several key factors offer
investors opportunities to build their nest eggs. These include:
Recent drop in energy prices
Low unemployment rate
Record-setting equity markets
Decreasing tax liabilities
Wealth-to-income ratio near a five-year high
“Conditions are ripe for investing and saving,”
says Robert L. Bagby, chairman and chief executive officer of A.G.
Edwards. “A number of economic factors
indicate America is in the midst of an environment that is conducive to
wealth-building. This is a good time for investors to identify
opportunities and implement a program that will enable them to meet
their financial goals.”
Americans Spend First, Save Later
According to the Nest Egg Score Survey, conducted by Harris Interactive®,
79 percent of U.S. adults typically have cash remaining after fixed and
day-to-day monthly expenses are paid. However, only 5 percent use the
excess cash to increase the contribution to their retirement plans.
“A large part of the adult population seems to
prefer spending extra cash on entertainment (42 percent) and shopping
(35 percent),” says A.G. Edwards Financial
Planning Specialist Sophie Beckmann, CPA, CFP®.
“While it may be tempting to treat yourself
after paying bills, building wealth for the future will have a bigger
payoff in the long run.”
As an example, Beckmann points out that if a 25-year-old invested $5 per
day, or $150 per month, by the time he or she turns 65, the account
would be worth more than $359,000, assuming a 7 percent annual rate of
return.(a)
The Nest Egg Score Survey also finds that when U.S. adults are saving,
they are more likely to allocate funds conservatively by contributing to
traditional savings accounts instead of investing in stocks or mutual
funds, which carry more risk but also offer a higher return potential. “People
need to recognize that a nest egg is much more than just saving for a
rainy day,” says Beckmann. “While
savings accounts are certainly necessary for emergency funds, there are
many other savings vehicles investors can take advantage of when
planning for the future. By paying yourself first and sticking to a
systematic savings plan, you can be in a better position to meet your
nest egg needs.”
(a) Example is for illustrative purposes only and does not reflect the
performance of any specific investment.
New Year, New Nest Egg?
“For many of us, saving and investing are
important New Year’s resolutions,”
says Beckmann. “People should take advantage
of a financial consultant’s knowledge and
experience to help them achieve their short- and long-term financial
goals.”
Here’s a snapshot of how employed Americans
plan to save and invest over the next 12 months:
Savings Vehicle
2006 Actual Participation
2007 Planned Participation
401(k)
37%
34%
Traditional savings account
23%
25%
IRA/Roth IRA
19%
21%
Stocks
18%
18%
Mutual funds
15%
15%
Talking 'Bout My Generation
As part of the quarterly compilation of its Nest Egg Score, A.G. Edwards
also examined the generational differences in savings and investing
habits of Generation Y and millennials (18- to 39- year-olds), trailing
edge baby boomers (40- to 49-year-olds), full-fledged baby boomers (50-
to 64-year- olds) and adults 65 and older. The survey revealed a number
of findings, including:
A New Spin on Mid-Life Crisis - About two-thirds of U.S. adults
(64 percent) report that they or someone in their household has a
retirement plan, but significant activity in building a nest egg doesn’t
kick in until they are 40 years old. Only 54 percent of Generation
Y/millennials say they or someone in their household has a retirement
plan, compared with 69 percent of trailing edge baby boomers, 71
percent of baby boomers and 70 percent of those 65 or older.
Similarly, in 2006, 77 percent of employed baby boomers and 72 percent
of employed trailing edge boomers did something to build their nest
eggs compared with 59 percent of working Generation Y/millennials.
Generation Y/ Millennials Off to Slow Start -Survey
results show that aside from seniors who are actively dipping into
their retirement savings, Generation Y/millennials are the most
conservative with their nest eggs. In fact, when compared with baby
boomers, the younger generation of workers is less likely to plan to
invest in stocks (13 percent of employed Gen Y/millennials versus 27
percent of employed baby boomers) and mutual funds (11 percent of
employed Gen Y/millennials versus 25 percent of employed baby boomers)
in order to build their nest eggs in 2007.
America Is Not Saving for Retirement - Ironically, baby boomers
closest to retirement are more likely to put extra money into a “rainy
day” emergency fund (22 percent) or give it
to charity (20 percent) rather than put it toward retirement (7
percent). Surprisingly, 28 percent of all U.S. adults do not
participate in any retirement plan, including 25 percent of those ages
40-49, 22 percent of those 50-64 years old and 24 percent of those age
65 and older.
What’s Your Score?
Are you being overly cautious or not sure you’re
saving enough? To help individuals determine their personal Nest Egg
Scores, A.G. Edwards offers the Nest Egg Score Estimator. The Nest Egg
Score Estimator asks a variety of questions including length of
employment at current job, annual household income, investment
preferences, risk tolerance, home equity and discretionary spending
habits. It also takes into consideration your age, marital status and
where you live. To find out how your savings and investing habits rate
in relation to the rest of the country, please visit nesteggscore.com.
About the Nest Egg Score
The A.G. Edwards Nest Egg Score is a single, quarterly, three-digit
numerical rating that represents a measure of the relative strength or
weakness of Americans’wealth-building
performance, similar to the scoring systems used to evaluate
creditworthiness. A high Nest Egg Score indicates that households are
having more success in building their nest eggs or that economic
conditions are favorable for saving and investing. Conversely, a low
score means that households are not taking advantage of opportunities to
build their nest eggs or that economic conditions are not conducive to
wealth accumulation.
To create the Nest Egg Score, A.G. Edwards takes into account 12
statistical factors gathered from federal government data and
proprietary research conducted for A.G. Edwards by Harris Interactive®
that pertain to building wealth. Quarterly data for each factor is
evaluated and scored on the following scale: 450 to 549 -- poor; 550 to
649 -- fair; 650 to 749 -- good; and 750 to 850 -- excellent. The 12
individual scores are then combined and weighted to determine the Nest
Egg Score.
For further information on the A.G. Edwards Nest Egg Score, go to nesteggscore.com.
Survey Methodology
The four quarterly Nest Egg Score surveys were conducted online by
Harris Interactive®
on behalf of A.G. Edwards among a nationwide sample of U.S. adults aged
18 and over within the United States as follows: between Nov. 17 and
Nov. 21, 2006 among 2,323 adults; between Aug. 23 and Aug. 25, 2006
among 2,295 adults; between May 23 and May 25, 2006 among 2,197 adults;
and between March 14 and March 16, 2006 among 2,182 adults. Figures for
region, age within gender, education, household income and
race/ethnicity were weighted where necessary to bring them into line
with their actual proportions in the population. Propensity score
weighting was also used to adjust for respondents’
propensity to be online.
With a pure probability sample of these sizes one could say with a 95
percent probability that the overall results have a sampling error of
+/- 3 percentage points. Sampling error for data based on sub-samples
may be higher and may vary. However that does not take other sources of
error into account. This online survey is not based on a probability
sample and therefore no theoretical sampling error can be calculated.
Harris Interactive®
is responsible for fielding the online surveys on behalf of A.G.
Edwards. A.G. Edwards is responsible for the compilation of data from
other sources and for computing the Nest Egg Score and the results
reported.
About A.G. Edwards & Sons, Inc.
Drawn to the firm’s client-first philosophy,
individuals and businesses have turned to A.G. Edwards for sound advice
and access to a wide array of investment products and services that can
help them meet their financial goals and objectives. Founded in 1887,
A.G. Edwards and its affiliates employ nearly 6,700 financial
consultants in more than 740 offices nationwide and two European
locations in London and Geneva. More information can be found on
agedwards.com.
How A.G. Edwards Does Business
A.G. Edwards generally acts as a broker-dealer but may act as an
investment advisor on designated accounts, and the firm’s
obligations will vary with the role it plays. When working with clients,
the firm generally acts as a broker-dealer unless specifically indicated
in writing. To better understand the differences between brokerage and
advisory services, please consult “Important
Information About Your Relationship With A.G. Edwards”
on agedwards.com/disclosures.
About Harris Interactive®
Harris Interactive®
is the 12th largest and fastest-growing market
research firm in the world. The company provides research-driven
insights and strategic advice to help its clients make more confident
decisions which lead to measurable and enduring improvements in
performance. Harris Interactive®
is widely known for The Harris Poll, one of the longest running,
independent opinion polls and for pioneering online market research
methods. The company has built what it believes to be the world’s
largest panel of survey respondents, the Harris Poll Online. Harris
Interactive® serves
clients worldwide through its United States, Europe and Asia offices,
its wholly-owned subsidiary Novatris in France and through a global
network of independent market research firms. The service bureau, HISB,
provides its market research industry clients with mixed-mode data
collection, panel development services as well as syndicated and
tracking research consultation. More information about Harris Interactive®
may be obtained at harrisinteractive.com.
