E*TRADE Shares Retirement Sentiment Data And Savings Tips

E*TRADE Financial Corp (NASDAQ: ETFC) recently spoke with Benzinga and shared some as-of-yet uncirculated data and tips from its senior vice president of retirement, investing and savings, Lena Haas, regarding the disparity between investor sentiment and action in regards to retirement.

Each quarter, E*TRADE conducts a tracking study titled "StreetWise," which follows 900+ experienced investors and evaluates their patterns of thought and subsequent actions.

Results

This most recent installment resulted in some interesting findings, including stronger concern about retirement savings over physical injury, relationships and even job loss.

The concern over not having enough for retirement was cited to occur as frequently as concerns for losing loved ones. When asked how often investors worried about the following, they responded with a percentage of frequency (with 100 percent equaling constant/always):

• Not enough retirement savings: 30 percent
• Loss of a loved one: 30 percent
• Lacking Investing Smarts/Understanding: 22 percent
• Relationship Issues: 20 percent
• Job Loss: 18 percent
• Physical injury: 17 percent

Related Link: Retiree Taxes: A Closer Look

When asked about what influences the concerns over retirement savings, the survey participants listed short-term expenses including housing, food and utilities as main strains upon savings. However, other influencers negatively impacting retirement savings included "living for today."

Considering specific barriers, respondents claimed that the following were significant concerns (with 100 percent being very concerning):

• Family healthcare costs: 45 percent
• Rent/Mortgage: 38 percent
• Living for today: 37 percent
• Daily living expenses: 35 percent
• Children's education expenses: 32 percent
• Child care: 20 percent
• Student loans: 20 percent

Haas noted, "Investors have the all-too-human tendency to value today's expenses over future security."

"The key to combating this emotional decision-making is in how we contribute to our plan. We must remove emotion from the equation – and we can do that through automation."

Related Link: Bankrate Releases Ranking Of 172 Cities Based On Satisfaction For Retirees

Expert Suggestions

Haas shared that automated investing can help deter the fear and concern over retirement by setting up a continual approach to prepare for that period of uncertainty. By acting now, and frequently, Haas suggests that control over retirement sentiment can be reined in and more easily contended with.

Specifically, Haas offered these three tips:

• 1. 401(k) Automation And Matched Contribution: "Setting up contributions to automatically deduct form each paycheck will help instill discipline and erase emotional financial decision-making. Additionally, many employers offer 401(k) plans with a contribution match. If this is the case, make sure to automatically contribute enough to have the employer match kick in, as not doing so is akin to leaving money on the table," Haas said.
• 2. AIP/Dollar Cost Averaging: Haas shared, "For those without a 401(k) option, or who also have a Roth or Traditional IRA, Automatic Investing Programs, or AIPs, make investing routine, instead of something you regularly have to think about. Dollar cost averaging allows investors to put even small sums of money to work by buying a fixed amount of a given security every week, month, quarter or however often they decide to invest. Over time, dollar cost averaging can potentially provide more shares than if they were purchased all at once."
• 3. Make Your Money Work: Haas' final piece of advice was to put that well-earned cash to work, "Emotional decision-making can also cause investors to keep too much cash in their investing accounts. Be mindful of cash allocation and map against your target allocation every six months, using tools like E*TRADE's Online Portfolio Advisor. For investors with dividend-paying securities, consider Dividend Reinvestment Programs, or DRIPs, which offer a way to automatically reinvest any cash earned from dividends."