Data & Research June 16, 2008

Affluent Boomers Express Top Retirement Concerns

Although more affluent investors are choosing to work in retirement to supplement their income, few are choosing to meet more often with their adviser, a study by Cogent Research says.
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Maintaining a current standard of living is the top concern among affluent investors age 45 to 65, according to recent Cogent Research. The study, The Retirement Income Dilemma, examines the behaviors and attitudes of pre-retirees. According to a release about the results, the top 10 investor concerns are:

  • fear about not maintaining current standard of living;
  • healthcare/prescription costs;
  • availability of Social Security;
  • outliving assets;
  • inflation of U.S. dollar;
  • market conditions/performance during retirement;
  • leaving legacy for children/heirs;
  • impact of taxes on income;
  • paying for children’s education; and
  • caring for elderly parents.

Unlike previous generations, nearly 20% of American pre-retirees expect to continue working in retirement in order to supplement their retirement income or provide reasonable insurance coverage, the release says. However, less than 1% choose to meet their advisers more often to discuss their investment options.

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Lacking a Plan

Only half (51%) of affluent investors have actually completed a detailed retirement income plan, according to another Cogent Research study.

Predictably, the number of affluent investors with a retirement plan increases among those closer to retirement. Yet 31% of those born between 1925 and 1945 still do not have a plan. Among those born between 1946 and 1955, 42% lack a retirement income plan, and the number is even higher at 53% for those born between 1956 and 1964.

“The fact that even the most affluent of investors amongst us show clear signs of anxiety, confusion, and lack of direction suggests a budding retirement income crisis here in America,’ said Alan White, project director of Cogent Research, in the release. “Furthermore, it is clear that financial advisers and asset management firms have a long way to go in terms of proving themselves as resources to investors.”

The Retirement Income Dilemma is based on a series of focus groups among affluent ($250,000 in investable assets) and high-net-worth investors ($1,000,000 or more investable assets) aged 45 to 65. The groups were further segmented by investors who are at or near retirement and others who see a retirement horizon five to 10 years out. Focus groups were also conducted with advisers across all distribution channels.

See also: Affluent Boomers Look Outside the Plan.


IMHO June 14, 2008

IMHO: Time Enough?

My dad has been on my mind a lot of late—for no particular reason that I’ve been able to identify.
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The anniversary of his passing was several weeks ago—his birthday not until October. The approach of Father’s Day is the most obvious explanation—but the truth is, Father’s Day with my dad was never a particularly memorable occasion (Dad always liked his Sunday afternoon naps).

He was a man of few words (outside his pulpit, anyway) and, like many men of his time, wasn’t inclined toward big shows of emotion. Ultimately, he was with us longer than he expected to be—but a lot less time than I ever anticipated.

Perhaps because I’ve been in that frame of mind—perhaps because of his closeness with his father, and his books that shared that relationship with the rest of us—the news of Tim Russert’s untimely passing Friday really stuck with me this Father’s Day weekend.

People die tragically and prematurely every day, of course. However, most of them are unknown to us, and nearly all are unnamed to us. As for Russert—well, I didn’t know him, never met him—but he spent a lot of Sunday mornings in my living room. Politics aside, his was a face and a voice that I got to know. He was older than I, but not so much so that his passing would be expected. He was, by all accounts, a loving son, husband, and father—a man in the prime of his career. That he might have gone to work Friday just like any other day—to realize that on any given day, any one of us could go to work and simply not come home…well, it reminds us just how precious and sometimes tenuous life can be.

We know that, as ironic as it sounds, death is a part of life. Thoughtful individuals prepare for the possibility of death—through faith and, with luck, sound financial planning. Most don’t dwell on those realities, and that’s doubtless a good thing, IMHO.

In this business, we spend a lot of time worrying about the risks of outliving our retirement savings. Participants increasingly seem to rely on an assumption that they will work longer, or save more later, to make up for their current shortfalls.

However, Tim Russert’s passing should remind us all again that we don’t always have as much time as we might want.

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