-  Despite Ambitious Long-term Savings Goals, GenXers Grow More Conservative, Acknowledge Need for a Comprehensive Financial Plan –

PARSIPPANY, N.J. — Generation X investors, the 52 million Americans born  between 1967 and 1981, remain ambitious in their long-term financial goals, with 61 percent expecting a higher standard of living in retirement than their parents.  Seventy seven percent characterize their savings objectives as “equal to” or “greater than” their parents’.  Yet, most GenX investors are inadequately prepared for the financial challenges of their anticipated early retirement and long life span, according to the Third Annual GenX Survey released today by the MainStay division of New York Life Investment Management LLC (NYLIM). 

In response to market losses and Wall Street scandals, GenX investors have slowed their investment pace, creating a gap between their financial objectives and investing behavior.   In fact, over the past 12 months the percentage of GenXers who stopped investing due to market losses has more than doubled, from 4 percent in 2002 to 11 percent in 2003.  

As a result, only 59 percent of today’s GenXers own non-retirement assets, down from 70 percent in 2002.  The number one reason cited for the decline is “lack of funds” (58 percent), followed by “inadequate experience making financial choices” (29 percent) and the perception that they “lost too much money in the past 12 months” (11 percent). Owing to recent corporate scandals, nearly one-third (32 percent) of GenX investors report a distrust of Wall Street.

“GenXers have been shaken by the prolonged recession and unstable job market,” notes Beverly J. Moore, Managing Director, NYLIM Retail Markets.  “This has created a bias toward security, driving GenXers to reallocate their portfolios in favor of predominantly conservative financial products.”

Over the past 12 months, GenXers have increased their ownership of insurance and real estate products, decreasing their investment in mutual funds and securities.   As a result of this rebalancing, insurance emerges as the most popular financial product in 2003, purchased by 75 percent of GenXers (compared with 62 percent in 2002), followed by mutual funds at 71 percent (down from 85 percent in 2002).  Interest in real estate as an investment grew to 55 percent of respondents, a 12 percent increase over last year.  Securities, last year’s second most popular vehicle at 69 percent, decreased considerably to 47 percent.  Cash positions and money market products continued to be attractive choices for 50 percent of GenX investors. 

Despite their increasing caution, GenXers remain less conservative in their investment choices than either baby boomers or seniors.   According to the 2003 MainStay survey, 31 percent of GenXers describe themselves as “conservative” investors, versus 45 percent of Boomers and 53 percent of Seniors. 

However, “Few GenXers are investing sufficiently – or aggressively enough – to achieve their ambitious retirement goals,” observes Moore.  “With a life expectancy of 85 to 89, GenXers may live for as many as 30 years on their retirement income.  To remain on track, they need to develop a comprehensive financial plan, which includes an overall asset allocation approach, and stay the course.”

While only one-third of GenX investors currently have a financial plan – down somewhat from last year – approximately 70 percent of those without a plan believe that they will need one in the future.  The MainStay survey reveals a strong correlation between financial planning and investor confidence, with 95 percent of GenXers who have a comprehensive plan identifying themselves as “on target” to reach their long-term financial objectives.  Increasingly, GenXers expect to develop a financial plan with the help of an investment professional.  Fully half of this year’s respondents acknowledge needing “the help of professional advisors to manage investments,” up from 44 percent in 2002.  

Among the survey’s other key findings:

• Under-funded:  More than half of GenXers (58 percent) feel they don’t have enough money to invest, up from 45 percent in 2002.  Twenty-nine percent believe they don’t have enough experience to make smart investment decisions, up from 23 percent. 

• On their own: The majority of GenXers feel neither the government nor their company plan will support them in retirement.  More than three-quarters (76 percent) discount the impact of Social Security and almost half (48 percent) are bearish about their 401(k) plans.

• Trending to the right: Over the past twelve months, GenXers have grown more conservative in their investment behaviors and attitudes.  Nearly one-third (31 percent) of GenX investors now describe themselves as “conservative,” up from 22 percent in 2002.  Similarly, the percentage of GenXers describing themselves as “aggressive investors” declined from 20 percent in 2002 to 17 percent in 2003.

• Financial insecurity:  In 2002, more than 60 percent of GenXers believed their families would be financially secure in the event of terminal illness, disability or death.  Only 52 percent concur this year, a decline of almost 15 percent.

The MainStay GenX Survey, completed in March 2003, polled 515 U.S. consumers ages 22 to 36 on their investment attitudes, behaviors, objectives and priorities.  An online research firm conducted the survey.  Respondents were U.S. residents with investable assets of $50,000 or more.

MainStay Funds cover most major asset categories, including equity, fixed income, high yield, and international.  The MainStay Funds offer active and quantitative management and are distributed by NYLIFE Distributors Inc., NYLIM Center, 169 Lackawanna Avenue, Parsippany, New Jersey 07054.  For more information about any of the MainStay Funds, including a free prospectus that includes fees and expenses, call (800) MAINSTAY or visit the MainStay Funds site at www.mainstayfunds.com .  Please read the prospectus carefully before investing.

With more than $158 billion in assets under management as of March 31, 2003, NYLIM and its affiliates provide a wide range of investment services to institutional, individual, corporate, public, and Taft-Hartley clients, including institutional asset management, retail investments, retirement services, guaranteed products, real estate investments, and alternative investments. For more information, visit the New York Life Investment Management site at www.nylim.com .

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