WEBVTT - Retirement Savings Versus Safety

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Masser and

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<v Speaker 1>Jason Kelly on Bloomberg Radio. Havefullily retired? Now array for

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<v Speaker 1>you retired? Well, I guess some people may be doing

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<v Speaker 1>a little dance when they retire, but maybe fewer people

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<v Speaker 1>than you think. And that's because maybe they haven't saved

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<v Speaker 1>enough money and how they save it is changing. Let's

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<v Speaker 1>get into that with Frederick Acciter. He is the head

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<v Speaker 1>of the institutional client group at a Wells Fargo Asset

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<v Speaker 1>Management based in San Francisco. Here with me in New

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<v Speaker 1>York City in our Bloomberg Interactive Brokers studio today. So

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<v Speaker 1>great to have you with me. Thank you and thanks

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<v Speaker 1>for all right. So you have done a retirement study,

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<v Speaker 1>your tenth annual Wells Fargo's tenth annual, and I have

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<v Speaker 1>to say, reading through some of the details of it,

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<v Speaker 1>there are some things that really jump out, most notably

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<v Speaker 1>how much money people have saved by generation, or in

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<v Speaker 1>some cases not saved. That's exactly right. I mean, we're

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<v Speaker 1>seeing a fundamental shift in the retirement landscape with more

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<v Speaker 1>and more responsibility to the to all of us too.

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<v Speaker 1>We have to fund our own retirement, so Interestingly, eight

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<v Speaker 1>six percent of today's retirees are saying that that that

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<v Speaker 1>either social security or traditional pension plan is a primary

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<v Speaker 1>source of income in retirement. And then that of course

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<v Speaker 1>goes down dramatically for for other for for younger generations.

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<v Speaker 1>And that brings us to to your really to your

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<v Speaker 1>question of the mismatch between savings and safety what people

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<v Speaker 1>have saved and what they perceive they will need to

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<v Speaker 1>have a safe retirement. So take Generation X as an example.

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<v Speaker 1>On average, they've saved sixty six thousand dollars and they

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<v Speaker 1>say that they will need seven two thousand dollars in

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<v Speaker 1>order to safety retire. It's eleven times more. Wow, So

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<v Speaker 1>is the mismatch owing to people saying just not getting it.

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<v Speaker 1>I mean I have to say I and many many

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<v Speaker 1>things to my wife for this and our financial planet,

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<v Speaker 1>like we're pretty maniacal about it. Um And you know,

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<v Speaker 1>a lot of it is about just the math of Okay,

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<v Speaker 1>save now, and it grows and hopefully with markets cooperating

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<v Speaker 1>in things like that. But why aren't people saving? Is

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<v Speaker 1>it that they can't or that they just don't. I

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<v Speaker 1>think it's always a combination, but it's it's you know,

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<v Speaker 1>we have to kind of step back and say that

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<v Speaker 1>that most people they don't have the knowledge or interest

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<v Speaker 1>or time, you know, to to also save. It's difficult.

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<v Speaker 1>But what we find is that when people have a

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<v Speaker 1>combination of a long term financial goal and a sense

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<v Speaker 1>of taking action, what we call when people are in

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<v Speaker 1>the planning mindset, extraordinary things happen. That's when you see

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<v Speaker 1>a real change in terms of savings behavior and just

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<v Speaker 1>success from a financial standpoint. And so are you seeing

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<v Speaker 1>the next generations? Are I'm Generation X? Are the younger

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<v Speaker 1>generations than me? Saving more less? How is it trending?

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<v Speaker 1>The trend is in many ways favorable. Actually, Generation X

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<v Speaker 1>stends out is the most vulnerable generation. We're kind of

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<v Speaker 1>sandwiched in between two systems of having a traditional defined

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<v Speaker 1>benefit plan or auto enrollments and automatically being enrolled in

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<v Speaker 1>plants every younger younger generations, so millennials, for example, they

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<v Speaker 1>started saving six years earlier than Generation X, so they're

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<v Speaker 1>better off from that standpoint. They're more of them that

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<v Speaker 1>feel like they're on track for secure retirements as well.

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<v Speaker 1>Almost in every way they they're a little bit better

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<v Speaker 1>off than Generation X. And is that in part because

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<v Speaker 1>companies are doing a better job essentially sort of making

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<v Speaker 1>it more obvious and clearer what their employees need to do. Yes,

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<v Speaker 1>that's exactly what I mean. More and more companies now

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<v Speaker 1>are saying that as soon as you start working there,

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<v Speaker 1>you're automatically do nothing and you still have a sense

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<v Speaker 1>of taking action. Right, and so what else needs to

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<v Speaker 1>be done? What? What? What's the best single piece of

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<v Speaker 1>advice you can give somebody if they're listening to this

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<v Speaker 1>and they say, I'm gen x, I'm right where you're

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<v Speaker 1>talking about or on the lower end, is it just

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<v Speaker 1>about kind of taking that first step? What do they

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<v Speaker 1>need to do? Yeah? That that is? That? Is that

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<v Speaker 1>the really the answer? I mean we find again this

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<v Speaker 1>planning mindset, combination of a long term goal and a

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<v Speaker 1>sense of taking action. When you do that, extraordinary things happen.

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<v Speaker 1>And that's when you have more than twice the savings.

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<v Speaker 1>You have twice as likely to say, on track for

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<v Speaker 1>a secure tirement. So whatever you can do is sit down,

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<v Speaker 1>establish a financial plan. You know that long term goal,

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<v Speaker 1>Try to find waste to take action. I mean, maybe

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<v Speaker 1>that's a roll in your four one K plan, or

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<v Speaker 1>start saving a little bit more, start paying down debt.

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<v Speaker 1>Debt is a big problem as well, so start taking

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<v Speaker 1>actions so that it's less overwhelming, right, all right, very

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<v Speaker 1>very good advice, and a survey worth checking out because

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<v Speaker 1>it really sort of lays it all out very nicely.

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<v Speaker 1>Frederick Exeter is head of Institutional of the Institutional Client

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<v Speaker 1>Group excuse me, at Wells Fargo Asset Management, based out

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<v Speaker 1>in the City by the Bay, San Francisco. Here in

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<v Speaker 1>New York City today