Are Affluent Households As Worried About Retirement As Everyone Else?

Retirement sack full of one hundred dollar billsAre affluent households worrying about having enough money to last through retirement? According to a survey from Bank of America, the short answer is “yes” – in fact, it’s one of their biggest concerns.

Bank of America polled 1,000 “affluent” people with investable assets of between $50,000 and $250,000. The results were published in the October issue of Pension Benefits:

“More than half (55%) of the mass affluent (defined as individuals with $50,000 to $250,000 in total household investable assets) fear going broke during retirement-far more common than other stress-inducing pressures such as losing their job (37%).

More women than men (59% versus 51%) are frightened about the possibility of not having enough money throughout retirement, and the fear of an uncertain retirement is also most common among 61% of Gen Xers (aged 35 to 50) and 61% of Boomers (aged 51 to 64). Only 41% of Millennials (aged 18 to 34) feel this way.

Despite their fears about future finances, many mass affluent won’t consider cutting back on indulgences today to save for retirement-from entertainment (33%) to eating out (30%) to vacations (28%).

Even if they were faced with a hypothetical milliondollar windfall, fewer than one in five (19%) would make it a priority to set aside the ‘found money’ for their retirement years.

More Boomers (27%) than Gen Xers (16%) and Millennials (6%) would first consider allocating a million-dollar lottery prize to their retirement funds.

Additionally, the most common factors competing with respondents’ regular retirement savings are unexpected costs (33%) and paying off big debts (31%). Paying off large debts (such as student loans) has competed with the retirement savings of more Millennials (38%) than any other generation.

On average, retired respondents stopped working at age 68; however, those who have not retired plan to at age 65. Single mass affluents, on average, plan to retire or have retired at age 62. More than two in five (41%) mass affluents who have not retired yet imagine that they’ll need an annual income somewhere in the $50,000 to $99,999 range when they retire.

About a quarter of Millennials (24%) and Gen Xers (25%) believe they’ll need at least $150,000 annually when they retire-far more than Boomers, with just 11% believing they’ll need that much income in retirement.

As for when people began saving for retirement:

Most (90%) of the mass affluent have retirement savings and began saving at 33 years old, but Millennials are planning for the future at a much younger age, with more than half (54%) starting between the ages of 18 to 24- Eighty percent of Millennials currently have retirement savings.

The most common trigger for those with retirement savings to begin investing for retirement was an account being offered at work (48%). Far fewer were spurred to invest due to major life events like getting married (18%) or having their first child (12%).

More millennials (36%) and Gen Xers (32%) than Boomers (15%) and Seniors (12%) were motivated to save for retirement when they started their first jobs. Almost three in ten (28%) Millennials first started saving for retirement after a raise or promotion at work, versus 10% of older generations.

The article can be read in the journal Pension Benefits. The report can also be viewed here.

 

Photo by 401kcalculator.org

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