– Over A Third Of Investors Change Asset Allocation In Response To Improved Markets –

– Matures & Boomers Dash GenXers’ Dreams of Inheritance, College Funding –

PARSIPPANY, NJ, JULY 14, 2004 — The three primary demographic groups – GenXers, Boomers and Matures -- have taken dramatically different approaches to managing their liquid assets in the past year, according to the Fourth Annual Across Generations Survey released today by the MainStay division of New York Life Investment Management LLC (NYLIM).  The survey  -- which polled individuals having a total net worth of $100,000 or more – showed that, among investors who have reallocated assets over the past 12 months, 67% of Matures and 63% of Boomers added equities as opposed to 53% of GenXers.  During the same time period, 34% of GenXers added cash, compared to 26% of Boomers and 14% of Matures.  Looking forward, 12% of GenXers plan to add to their cash positions, as do 15% of Baby Boomers and 13% of Mature investors. 

“Overall, the amount of cash sitting on the sidelines is good news for the investment community,” notes Beverly Moore, Managing Director, NYLIM Retail Markets.  “As the employment picture improves and confidence returns, investors still have liquid assets to shift into the market. For many investors, increasing their long-term equity allocations will be the key to optimizing their asset growth for retirement.”

Back On Track

Baby Boomers and Mature investors’ move to increase their non-retirement investments has allowed them to catch up with GenXers, who continued to invest during the 2002-03 downturn.  More than three quarters (79%) of Boomers and two-thirds (67%) of Matures have non-retirement assets invested in financial products, up 22% and 12% respectively over the past 12 months.  The ranks of GenX investors – 73% of whom invested in 2003 – have also grown somewhat over the past year, with 75% of GenXers now investing non-retirement assets in the market. 

Retirement Saving Grows

Across all age groups, retirement assets are similarly on the rise, with the average annual amount contributed to savings increasing to $10,164, up 18% from 2003.

“Boomer and Mature investors are back on track,” said Moore.  “Last year, the prolonged recession and weak job market slowed their savings pace, creating a gap between financial objectives and investment behavior.  Today, these investors are flooding back into the market, pumping up both their retirement and non-retirement savings and catching up to Generation X investors who stayed the course.”

Financial Situation Improving

A sign of the improving times, 90% of the investors surveyed in 2004 describe their financial situation as very or somewhat secure.  Most (72%) are confident that their family would be taken care of financially if they or their spouse were to pass away or become disabled.  And, while nearly three-quarters (74%) of GenXers doubt that the government will provide them with enough financial assistance when they retire, fully 64% expect their standard of living in retirement to be greater than their parents.  Their confidence could stem in part from their higher average household income of $144,100 vs. $131,000 for Boomers and $87,000 for Matures.

Among the survey’s other key findings:

Average Annual Non-Retirement Savings Stand at $16,000:  According to the MainStay survey, most GenX and Boomer investors are disciplined savers, putting money into an investment/savings account (other than their company retirement plan) on a much more regular basis than Matures.  On average, the GenXers and Boomers surveyed save approximately $16,100 per year, while Matures put away $12,700 annually.

College Savings Concerns: On the college funding front, investors remain somewhat pessimistic about their long-term prospects.  Fully 29% of GenXers and 22% of Boomers expect education costs to be out of their financial reach by the time their children/grandchildren are ready to attend college.  As a result, 58% of GenXers are “very” or “extremely” concerned about college funding.   While most GenXers (71%) and Boomers (63%) are currently saving for their children/grandchildren’s education, total planned contributions ($34,200 for GenXers and $32,300 for Boomers) are unlikely to make a significant dent in anticipated six-figure college costs. 

College Funding Discrepancy:  Contrary to widespread speculation that Matures would contribute generously to their grandchildren’s education, only 30% are currently putting any money aside, while 56% of Matures, 23% of Boomers, and 7% of GenXers do not plan on funding a portion of their children/grandchildren’s education. Among those who do expect to contribute, the average planned donation is relatively small -- only $20,300 for Matures and $32,300 for Boomers. Approximately half (51%) of Matures and a quarter (25%) of Boomers expect the student to pick up at least part of the tab.

Use of Investment Advisors on the Rise:  Reversing the do-it-yourself trend of the past decade, more investors of all age groups are seeking help from investment advisors.  More than one-third (45%) of GenXers, 42% of Boomers and 38% of Matures believe that they “need the help of professionals when it comes to managing [their] money.”  Currently, 41% of GenXers work with an investment professional, compared with 46% of Boomers and 54% of Matures.  An additional 18% of GenXers (i.e. potentially bringing the current total to 59%) expect to use an investment professional over the next three to five years, as do an additional 13% of Boomers and 8% of Matures.

Divergent Job Security: Nearly one-quarter (23%) of GenXers fear job loss as opposed to a somewhat smaller percentage of Boomers (16%) and Matures (7%).

Restless Retirements:  Roughly one-quarter of the retired Boomers and Matures surveyed have returned to work.  Why?  Boredom is the most frequently cited reason.  Nearly one-quarter (22%) of retired Boomers and 20% of retired Matures have re-entered the workforce as a result of boredom, up from 12% and 18% respectively in 2003.

Sustaining Current Lifestyle: When Boomer and Mature survey respondents were asked about their financial goals, 73% of Matures and 40% of Boomers noted that sustaining their current lifestyle is their top priority.  21% of Matures and 35% of Boomers rated paying off personal debt as their most important financial goal.  Only 1% of Boomers and 2% of Matures ranked leaving money to their heirs as the top concern.

The State of Real Estate:  Hugely popular in 2003, real estate fell somewhat out of favor in 2004, with fewer respondents citing it as part of their comprehensive financial plan.  Slightly more than half (57%) of this year’s respondents listed real estate as part of their plan, down from 65% in 2003.  Despite this drop, real estate remains attractive as a future investment option for investors of all ages, especially GenXers.  Fully 32% of GenX investors plan to add real estate to their portfolios in the next three to five years.  Nearly one-fifth (18%) of Boomers and 16% of Matures also plan to invest in real estate. 

Better Times Ahead:  There has been a strong increase in confidence among investors over the past 12 months, with 42% of GenXers, 39% of Boomers and 49% of Matures noting that the recession is over.  In addition, Boomer and Mature investment behaviors have become slightly more aggressive, with the percentage of investors identifying themselves as “conservative” shrinking 19% for Boomers and 18% for Matures since 2003.  More of these investors now consider themselves “moderate,” with the percentage of self-proclaimed moderates increasing 21% for Boomers and 16% for Matures over the past year.

MainStay’s Across Generations Survey (2004) was conducted by an online research firm during the spring of 2004.  The survey polled 1,504 U.S. consumers ages 23 to 71 on their investment attitudes, behaviors, objectives and priorities.  Respondents were U.S. residents with total net worth of $100,000 or more. The GenX investors polled were age 23 to 37, while the Baby Boomer and Mature investors were age 38 to 55 and 56 to 71 respectively.

MainStay Funds cover most major asset categories, including equity, fixed income, high yield and international.  MainStay Funds are distributed by NYLIFE Distributors LLC, 169 Lackawanna Avenue, Parsippany, New Jersey 07054.  For Fund information and to download a prospectus, please visit the MainStay Funds website at www.mainstayfunds.com. Investors are asked to consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus contains this and other information about the investment company. Please read the prospectus carefully before investing.

New York Life Investment Management LLC and its affiliates, with more than $180 billion in assets under management as of May 31, 2004, 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 website at www.nylim.com .

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