What do affluent investors want? This is the question that Bank of America's Merrill Lynch endeavored to answer in its "Merrill Lynch Affluent Insights Quarterly," a survey of individual investors with $250,000 or more to invest, released Monday.
With a focus on individuals living longer, this quarter's Affluent Insights honed in on concerns investors have about funding a longer retirement period. Citing U.S. National Center for Health Statistics data, the report projects the life expectancy of an individual born in 1950 at 68 years, someone born today at 78 years and a person born in 2050 at 83 years, and notes that "Baby Boomers are redefining retirement."
Boomers Thinking Differently About Retirement
Boomers, categorized in the report as 46 to 64 years of age, say their retirement will be different from their parents' retirement. They will: "be more active," according to 86%; with a "better standard of living," 72% said. These boomers also asserted they'll "keep working," (72%), to stay "more active and engaged."
Participants who were already retired recommended that younger generations begin to plan early: 78% said start planning "no later than your 30s," while 57% advised beginning to plan "in your 20s." They would also recommend that a 30-year-old "work with a financial advisor," said 34%; and "take a more hands-on approach to their investment portfolio," 27% advised.
Most retirees, 60%, said that they were able to retire when they had planned to, though 27% said they were unable to. Of those who did not retire when they had planned to, 34% cited "the recession," 23% decided to "keep working," and 23% said they'd "provided more financial support to adult children than anticipated." In addition, 21% said they "did not realize how much they needed to save for retirement," and 18% admitted that they had "started too late or did not save enough."
Women Plan More Active Retirement
Top concerns about retirement worry more women than men, according to the survey. "Rising health care costs and expenses," concerned 70% of women and 57% of men, while "ensuring retirement assets will last throughout their lifetime," concerned 63% of women and 52% of men. This is not so surprising, since women live, on average, longer than men do.
Women also differ from men in their plans for activities during retirement. More women than men plan to "travel, enjoy a hobby" or get involved in their community or philanthropy, while more men plan to start or nurture "their own business" or "pursue additional professional success."
The survey was conducted by phone with more than 1,000 affluent investors from Dec. 8, 2010, to Jan. 1. by Braun Research.
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