The 22.7 point rise between 2005 and now is reflective of plan participants’ anxiety about the volatile economy, escalating mortgage default woes and escalating debt concerns. As the stock market dramatically rises and falls, plan participants are likely seeing similar unnerving movement in their plan balances. Particularly if they are heavily invested in equities as many are. Half of the increase in concern occurred in one month, between July and August 2007, when the measure rose 11.1 points., in response to a particularly worrisome stock market the previous month.

It is also important to note that while saving for financial goals is weighing on participants’ minds, their risk tolerance has dropped 10 points from 35.6% in January of 2007 to 25.7% in August as the high flying stock market has seriously challenged investors, and risk has become less tolerable. This may be an indication that investors are poised to pull back dramatically from equities.

Real estate, which some economists believe is the lynch pin of the American economy has taken a beating over the last year. Foreclosures rose 9% between June and July of this year, and 93% in the same time period from last year, per Yahoo Finance. Though many are still waiting to see what happens with interest rates and to see if there will be another market correct, the anxiety produced by this volatile market is already wearing on retirement plan participants.

All retirement plan participants’ are feeling the anxiety pervading the country as confidence is low, with women participants in particular feeling extremely uneasy about their financial goals. Fifty-two percent of female participants agreed they were not saving enough, which is up 10.2 from just last month. The other group most concerned, predictably, is participants’ with less than $10K balance in their retirement accounts. Seventy-six percent of these participants believe they are not saving enough to reach their financial goals, which is 31.9 more than in January of 2005. The 50+ age group’s concerns soared this month with a record high of 47.7% concerned about their savings.

Considering the volatile stock market and struggling economy, none of this is very surprising, but now is the time when plan advisors and sponsors must assuage fears of participants, calming what could be a hasty mass exodus from investments that will pay off over the long term. Taking the opportunity to discuss portfolio diversity, long term investments and general market fluctuations in light of the doom and gloom headlines that are running in many newspapers and magazines across the country will help you build a more trusting and solid relationship with participants.

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