Retirement Saving
Americans Ages 45+ Score a "C" Grade on Consumer Issues
News Release
October 21, 2003
Americans 45+ were judged average, with potential for improvement, when it comes to consumer issues based on findings from AARP's new 2003 Consumer Experiences Survey that examined individuals' experiences with financial products and services. The survey looked at credit behavior, fraud and financial planning. These consumers are attempting to protect their financial security, however, their lack of basic financial knowledge can make their planning more difficult.
"Consumers age 45+ are the fastest growing and most valuable segment of the financial marketplace," said Christine Donohoo, associate executive director at AARP. "However, only half of the 1,500 respondents could correctly answer fundamental financial questions e.g., 'what charges and fees do no-load mutual funds have'; 'what does the FDIC cover in investment losses'; and 'does diversification of investments decrease risk.'"
Although consumers age 45+ are lacking knowledge of basic financial and investment terms they do understand some aspects of personal credit, including such things as how failing to make timely credit card payments can impact their credit rating. While acknowledging room for improvement, 45+ consumers also report managing their debt levels well, with only seven percent saying that they have more debt than they can financially handle. This knowledge prevented this group from receiving an even lower grade from AARP.
"We need to better educate consumers in basic financial planning," said Donohoo. "Without the planning, many consumers will have a rough time preparing for their future." For now, most information comes from family and friends instead of professionals who are trained at answering these issues.
There is good news in this report. Ninety-eight percent of all 45+ consumers surveyed have taken steps to protect their identity and credit situation. Some of these steps include ordering a copy of their credit report and limiting the number of identification cards they carry. Identity theft is one of the fastest growing crimes in the U.S. today and AARP encourages older consumers to protect themselves from this invasive crime.
The percentage of 45+ consumers reporting bad purchasing experiences in the past year has increased over the past four years. And while more consumers took some type of action, including complaints to the Better Business Bureau, in 2003 compared with 1999, overall respondents are slightly less satisfied in 2003 with the action they took. Of those people who say they had a bad experience in the past year, thirty-seven percent say they were victims of a major swindle or fraud.
Other key findings include:
45+ consumers own a variety of investment products
- Sixty percent of consumers own a 401(k) retirement plan;
- Thirty-nine percent invest through a mutual fund account;
- hirty-six percent own individual stock
45+ consumers are least prepared for future expenses
- Thirty-eight percent report having enough set aside for retirement;
- Twenty-four percent report having enough set aside for long-term care expenses
- Fifteen percent have "none at all" set aside for retirement
African-Americans and Hispanics that were surveyed are more likely to carry a higher debt ratio, are less likely to hold financial investments, and are more likely to have bad experiences with major purchases and products. There are some positives however. Both groups seek senior business personnel when they complain about a product or service and African-Americans are more knowledgeable than others surveyed in understanding the impact of on-time bill paying and how it reflects on their credit report.
The full report is available online.
AARP is a nonprofit, nonpartisan membership organization dedicated to making life better for people 50 and over. We provide information and resources; engage in legislative, regulatory and legal advocacy; assist members in serving their communities; and offer a wide range of unique benefits, special products, and services for our members. These include AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our quarterly newspaper in Spanish; NRTA Live and Learn, our quarterly newsletter for 50+ educators; and our Web site, www.aarp.org. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.