If it means working longer, affluent investors are prepared to do so to alleviate their concerns about retirement savings and the rising costs of health care.
According to Bank of America Corp.'s Merrill Lynch Affluent Insights Quarterly survey, issues related to retirement and health care rank highest among financial concerns. Among those who identified health care as a top concern (62%), more than half (56%) reported feeling unsure of how rising costs should factor into their retirement planning, up from 40% in January. This may help to explain why the number of survey respondents concerned about whether their assets will last throughout their lifetime rose to 61% from 53% during the last quarter.
Sallie Krawcheck, the president of B of A global wealth and investment management, said in a press release Tuesday that "they want to preserve capital, minimize risk and hopefully make up some of their losses, but they're not entirely sure where to begin. This desire for guidance bodes well for wealth managers who are willing to really listen and give clients what they need."
The study, the third in a series of quarterly surveys of affluent investors' concerns as they approach retirement, suggests that affluent individuals over 65 appear to be working longer.
Andy Sieg, head of retirement and philanthropic services for B of A Merrill Lynch, said many individuals surveyed indicated that they plan to continue working, even if only part time, "into their late 60s and 70s, pursuing dream jobs and devoting more time to charitable causes."
Affluent baby boomers between 51 and 64 are the most concerned about whether their assets will last through retirement (73%) and whether they will be able to live the lifestyle they had hoped to in retirement (61%.)
Forty percent of those respondents expect to retire later, compared with their expectations a year earlier.
Often referred to as the "sandwich generation," more than 45% of this group said that they have had to make sacrifices to support their family, 44% of these individuals have cut back on personal luxuries, 26% are now saving less for retirement and 19% have invited their adult-age children and/or parents to live with them to cut monthly expenses.
Individuals between 35 and 50 have similar concerns regarding health care, retirement and income, but this group is also concerned with funding their children's education (52%) and knowing how to manage a proper cash flow and liquidity strategy (31%).
During the past year, regulators have launched a number of initiatives to increase retirement savings, but 52% of respondents think more needs to be done. For instance, half of respondents said health care should be provided to all retirees, while 44% think more financial resources should be put toward Social Security.
In fact, 47% of affluent individuals between 35 and 50 assume Social Security will not play a role in their retirement, and nearly 70% are skeptical about Medicare, believing it will play little or no role in their retirement.
The survey polled 1,000 wealthy individuals nationally, and was conducted between March 3 and March 15.