LIMRA released new research at the 2015 Retirement Conference that finds wealthy Americans slot into three categories based on their emotional attitude to their savings.
The study surveyed 2000 pre-retirees and retirees (ages 50-75 with at least $100,000 in household assets) and, based on the results, identified three money mindsets:
Guarantee seekers – Want to know that their income won’t disappear. Have a floor of lifetime guaranteed income and would be interested in converting even more of their savings to a pension-like contractual guarantee. Want to spend money without the day-to-day worry of how long it has to last. Want the peace of mind of a certain outcome.
Estate planners – Financially savvy. Understand equity markets generally outperform risk-free fixed investments. Can withstand a little volatility to maximize the potential of investments. Trust their own investment decisions. Want to maintain personal control over investment decisions and to retain the flexibility to adjust income and spending as needs change over time.
Asset protectors – Have been saving money for a long time. Do not want to see savings account balance go down. Will live off the interest and dividends of savings, but uncomfortable invading principal. Don’t want to be poorer.
According to Jafor Iqbal, an assistant vice president with LIMRA who spoke at the event, advisors should be careful about predetermining how they will talk to a prospective client based on what they look like on a balance sheet. That’s because the study found that people in each of these categories can look very similar on paper, according to Iqbal. “They often share the same demographic profile, wealth level and lifestyle ambitions. But because their attitudes toward money are so different, we found a distinct divergence in the income solutions they prefer,” Iqbal said.