Affluent Boomers Look Outside the Plan

The annual survey of affluent Boomers from Bell Investment Advisors found that Boomers are in no rush to quit work or pay off their mortgage, and many use more than a retirement plan as their main source for retirement.

When asked what the principal source of funding for retirement is, the plurality of the 500 Boomers surveyed (31%) cited investments outside of a retirement plan, according to a press release of survey results.

“This finding supports the importance of maintaining a robust personal investment plan throughout a lifetime,’ said Jim Bell, founder and president of Bell Investment Advisors, in the release. “To have a comfortable retirement, this generation must augment traditional tax-deferred retirement savings plans and pensions, with their own investment plan—ideally by utilizing a healthy mix of equity investments.’ (See also Affluent Investors Like Both Mutual Funds and Alternatives.)

Boomers ranked the “principal’ source of retirement funding as:

• investments outside of a retirement plan: 31%
• pension plan: 23%
• company-sponsored plans such as a 401(k): 19%
• individual retirement account (IRA): 17%
• Social Security: 4%

What’s the Rush?

Affluent Boomers are in no hurry to pay off their mortgages or leave the workforce. More than 55% of mortgage-holding Boomers surveyed do not plan to pay off their mortgages until their 70s, if ever, the survey said. (Approximately two-thirds currently have mortgages on their current residences.)

Bell suggests that is not such a bad thing: “Contrary to conventional wisdom, mortgages can actually be a wealth-building tool for Boomers throughout their retirement years. In addition to their tax benefits, mortgages help free up funds that otherwise would be tied up in property ownership for investment in equities.’ Bell said investment in equities throughout a lifetime is the surest path to wealth creation.

Work for Fun

Affluent 60-year-olds are still holding down the fort in the workplace, according to the survey. Of those surveyed, 71% are still employed and 29% describe themselves as being retired in the conventional sense. Among those still working, nearly a quarter (23%) hope to work as long as they are able to, followed by 20% who plan to gradually scale back, another 20% who plan to pursue personal interests and passions, and 18% to work part-time, with 6% exploring alternative careers.

More than three-quarters (76%) of the Boomers surveyed who are still working plan to continue working after age 62 when Social Security kicks in. And 40% plan to continue working into their 70s. For Boomers surveyed who plan to work past age 62, the major reason cited (72%) was for the “intellectual and social stimulation’ work provides, followed by the goal of maintaining standard of living (51%), and to avoid tapping into savings (41%).

“Economics are not the primary reason these affluent boomers are continuing to work,’ Bell said. “Boomers still have a lot left to do. They are reaching the highest level in their careers, making more money, teaching and training the newer members of our workforce—work provides satisfactions well beyond their need for income.’

The survey was the second this year from Bell Investments based on high-net-worth investors who turn 60 this year (See the earlier survey: Affluent Boomers Adjust Portfolios Because of Economic Worries).

The survey was conducted by Opinion Research Corporation from April 1 to 6, among a random sample of 500 adults born in 1948 and having investible assets of $1 million or more.