From a geographic standpoint, the Northeast area of the United States is different than the Mountain West. The South is unique from the Pacific Coast. The Midwest is in the middle of all of it.
Some areas are hotbeds of retired Americans. Florida and Arizona have a noticeable percentage of its population numbered by so-called snowbirds, who split their time between the southern states in the winter and their former northern homes in the summer. Some retirees leave their northern climes entirely and set up permanent residence in Phoenix or Miami or other communities nearby.
Attitudes about retirement are likely to differ based on regional location. Spectrem research shows that attitudes towards retirement accounts differ by region as well.
Spectrem’s new study Regional Impact on Investors shows that ownership of retirement accounts differs significantly based on the regions of the country. Advisors who work specifically within one region or another can benefit from the knowledge of how their region looks at retirement accounts.
For example, while 62 percent of all investors have employer-sponsored defined contribution plans such as a 401(k), only 56 percent of Mountain West investors do. It is possible fewer investors in the Mountain West work for companies which provide 401(k) programs. Also, the Mountain West has the highest rate of retired and semi-retired investors compared to other regions of the country, and they may have rolled over their defined contribution plan into another form of retirement account.
However, a look at Individual Retirement Account ownership shows little disparity based on region. The only outlier is the Midwest, which sees 58 percent of its investors owning Roth IRAs, compared to just 52 percent at the national average. The national average for contributory IRAs is 60 percent (with 62 percent of Pacific Coast investors owning one), and the national average for Rollover IRAs is 60 percent as well (with 62 percent of Mountain West and Northeast investors owning them).
There are some more significant differences in the amount of money investors have in their defined contribution and retirement accounts. The Mountain West, with the lowest level of defined contribution ownership, has the most assets invested in contributory IRAs ($401,000 on average) and rollover IRAs ($701,000 on average). For comparison, investors in the South have only $612,000 in Rollover IRAs and Midwest Investors have only $616,000.
Another consideration for retirement is insurance and annuities, and ownership of those products is much different based on region. For example, while national ownership of life insurance is at 54 percent, only 44 percent of Pacific Coast investors have such insurance. On the other side of the ledger is Midwest investors, of whom 58 percent own life insurance.
The disparity in annuity ownership is not as wide. On the high end of fixed annuities is Mountain West investors with 27 percent compared to just 22 percent of Pacific Coast investors. For variable annuities, 24 percent of Midwest investors own them, compared to 20 percent of investors from the South.
It is notable that insurance and annuity ownership is relatively lower among investors from the Pacific Coast states, which for the purposes of the study are California, Oregon, Washington, Hawaii and Alaska. From a business standpoint, those states do operate differently than most other states due to ocean-related commerce, and the Pacific Northwest is home to much of the nation’s tech industries, which may impact financial decisions.
©2019 Spectrem Group