Why Retirement Isn’t Always Easy for the Rich
If you budget and you save, you should be able to retire comfortably — at least, that’s what most people have believed for decades. While middle-income and lower-income Americans fear they won’t have enough money to retire, most assume that wealthy Americans don’t have the same worry, or really, any worries about retirement. It seems that we are wrong, and that retirement isn’t just an easy road full of money and adventure for the rich.
Even though many people are affluent enough to retire and never worry about money again, even America’s richest citizens sometimes worry about money. They also have other worries apart from saving enough. Many wealthy Americans are worried about their family and their health. It appears that while having enough money certainly helps establish a comfortable retirement, it may not be enough to completely avoid retirement fears.
One of the issues that the richest Americans worry about is whether they will be able to continue their lifestyle after they retire. For people accustomed to spending a lot of money, retirement can be a big change, because most people won’t have their full-time earnings anymore. Even with a high percentage of pre-retirement earnings, plus Social Security, many so-called rich Americans will have to have a lot saved in order to continue their lifestyle because of the amount of Social Security benefits they will receive and the taxes they might face.
A 2011 survey by Harris Interactive for Wells Fargo Retirement found that 37 percent of affluent Americans felt they needed to significantly cut back on their spending in order to save for retirement. This number included 48 percent of those with $100,000 to $250,000 in investable assets, suggesting that even those with what most of us would consider enough money don’t feel they are saving enough. Forty percent of those surveyed said their biggest retirement fear was that they “will do all the right things today and it still won’t be enough for tomorrow.”
It seems that affluent women are less confident in their retirement than men. Eighteen percent of women surveyed felt that they would need to work until 80 in order to have enough money to live comfortably when they retire (as opposed to 9 percent of men). Thirty-one percent of women also said that they are not confident they will have enough saved to be able to live the lifestyle that they hope for after retirement.
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A separate 2012 survey was conducted by Bank of America with research partners Ketchum Global Research & Analytics and Braun Research. Fifty-six percent of respondents said they were planing to retire later than they were compared to the year before, and 28 percent of those who said they were saving for retirement differently were reevaluating their daily spending to cut costs.
According to the survey, of the respondents, 84 percent considered rising healthcare costs or expenses as one of their greatest financial concerns, 73 percent were concerned about ensuring that their finances would last throughout their lifetime, and 67 percent were concerned about affording the lifestyle they want in retirement.
A Millionaire Corner study, $25 Million Plus Investor 2012, suggested additional fears for the affluent. Ninety percent of $25 Million Plus investors (age 66 and older) said their children and grandchildren constituted one of their biggest concerns, and 86 percent worried about raising these family members to be financially responsible. Eighty-eight percent also worried about their spouse’s health, and 87 percent worried about their own health.
All three of these surveys suggest that retirement doesn’t come as easy to the rich as many of us might think. Although they have more money, many of them worry it won’t be enough. Like the rest of us, they also worry about their families and about their health. According to a July 2013 UBS Investors Watch, high net worth and affluent investors often don’t consider themselves rich.
Seventy percent of those with more than $1 million in investable assets said they did not consider themselves wealthy, and 50 percent defined wealth as having no financial constraints. Twenty-seven percent of investors said that affording healthcare and long-term care is their top personal concern, but 20 percent said their children and grandchildren’s financial situation ranked second, suggesting that affluent investors are thinking in much the same way as they were in 2012. The rich appear to have the same concerns that most of Americans have.