Even the affluent are stretched — MetLife survey

By Linda Stern

WASHINGTON, Nov 16 (BestGrowthStock) – Even the affluent are living
pretty close to the margin, spending what they have and
borrowing on credit cards for everyday emergencies like
household repairs, says a new study by MetLife Inc (MET.N: ).

As a result, the well-to-do are keeping their retirement
savings liquid in bank accounts and certificates of deposit so
the funds will be available for emergencies, says the study,
titled “Money on the Sidelines.” The report is slated for
release on Wednesday, Nov. 17, but Reuters obtained a copy
early.

“There’s a high cost to this liquidity,” says Robert
Sollman Jr. of MetLife. “They are putting their retirement
security at risk by not putting their money back to work in
the stock market.”

The people surveyed by MetLife had more than $200,000 in
investable assets, with most having between $250,000 and $1
million to invest. Yet more than half were using bank savings
accounts (52 percent) and money market funds (51 percent) for
at least a portion of their retirement savings. And 38 percent
were using bank CDs.

“The most common reason for keeping these assets liquid is
in case of household emergencies,” the study found. That
eclipsed other traditional reasons for keeping money liquid,
such as worries about stock market risk.

Even so, more than one-third borrowed money through home
equity lines, personal loans and credit cards to cover those
unexpected emergencies, with credit cards being the most common
go-to source of emergency money.

Affluent investors are more likely than others to have
changed their retirement savings patterns because of the
financial crisis. More than half said they have changed their
behavior, with many of them “parking” some retirement funds in
low-yielding but safe and liquid instruments.

But they aren’t depending on bank accounts for all of their
retirement savings. Roughly 65 percent of more-affluent
Americans are using mutual funds, 21 percent are using U.S.
Treasury bonds, 20 percent are using municipal bonds and 19
percent are using fixed annuities, MetLife said.
(Reporting by Linda Stern, editing by Gerald E. McCormick)

Even the affluent are stretched — MetLife survey