How Retirement Changes Your Perspective

In the interview below, Linda Shelby, a Merrill Edge executive, sits down with Brendan Byrnes to discuss the most recent Bank of America Merrill Edge Report. The report is a semiannual study that puts the behaviors or mass affluent consumers into perspective. At nearly 28 million households in the United States alone, understanding the sort of massive trends that affect these individuals can have powerful implications on your investments. Understanding paradigm shifts like those discussed here is a cornerstone of Motley Fool superinvestor David Gardner's own investing strategy, and is critical to achieving his market-thrashing returns. I invite you to learn more about how he discovers his winners; just click here now to read more.

Brendan Byrnes: I think when you get into retirement, or even near retirement, your perspective changes a little bit. Maybe you want to get less risky, move maybe toward a [less] risky buy, do it toward a more defensive stock like a Procter & Gamble, Johnson & Johnson, even fixed-income, moving more toward bonds.

How are those surveyed managing their investments and getting advice, maybe something like that? Are they increasingly doing it themselves, or are they moving more toward professional advice for them as well?

Linda Shelby: Interestingly, that population still considers themselves -- 41% -- consider themselves to be conservative investors, as they're nearing retirement. Many are still doing it themselves, but we are finding that they are turning to the financial professionals and, again, I think doing that just because of the volume of information and trying to sort it out to, "What do I need to do? I see all of this information, and I spend a lot of time doing it, but what does that mean to me? What do I do?"

It takes sitting down with a professional so that they break it down to just the very basic things of, "What do I need to do? Well, I need to figure out what I want to accomplish. How do I want to retire? What does retirement look like for me? How much is it going to take?"

Using a retirement calculator like the one, for instance, that we have at MerrillEdge.com, will let them see what it will take to live the lifestyle that they want, and then how much it will take to get there -- "What do I need to put away every month?" -- so that if they're not on track then they can figure out what they need to change; what nonessential expenses can they cut back so that they can put those funds in?

Those are the types of conversations that they need to have to feel confident that they're going to achieve that goal. What we found in our study is that those who are seeking professional advice do feel slightly more optimistic about the ability to reach those goals.


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