While many Americans' retirement looks bleak because they don't have enough money saved, a majority of wealthy baby boomers say their standard of living in retirement will top that of their parents, according to a new survey.Eighty-four percent of high-net-worth boomers, age 46 to 64, said their retirement will differ from their parents -- and of that group 86% said they plan to be more active, and 72% said their standard of living will be higher, according to a Bank of America Merrill Lynch survey of 1,000 people with investable assets of $250,000 or more.
Seventy percent of these boomers said they'll work in retirement, at least part time, "to remain more active and engaged;" 26% said they'll go back to school, 24% said they plan to learn a new trade, and 20% said they'll start or keep running their own business.
When asked what word they'd use to describe retirement, 35% said "freedom," 31% said "opportunity," and 21% said "relaxation." Just 9% said "uncertainty," according to the Merrill Lynch survey.
Still, while these wealthy boomers may be optimistic about their own retirement, other research suggests they're worried about their children's future, said Andy Sieg, head of retirement services for Bank of America Merrill Lynch.
"One dichotomy is that when you ask people the question -- how does their standard of living compare to their parents in retirement -- they tend to give you a very positive readout," he said. "When you ask them what the future looks like for their children...in terms of the next generation being better off, you tend to see more pessimism than we have in the past."
A Little Less Rosy
A separate survey last year of savers of all incomes and age levels found that about half of people are either "not too" or "not at all" confident they will have enough money saved for a comfortable retirement. That's according to the 2010 retirement confidence survey by the nonprofit Employee Benefit Research Institute.
The economic crisis did hit some wealthy boomers' retirement outlook: 27% said they did not retire at the age they had planned to when they were in their 40s, and 34% of that group said it was because the recession took a toll on their finances, according to the Merrill survey.
Another 23% of that subgroup said they delayed retirement because they had to provide more financial support to their children than they'd expected. And 23% said they decided to keep working.
Twenty-one percent of the group that delayed retirement said they did so because they "didn't realize how much I would need to save for retirement," and 18% said they started saving too late or didn't save enough.
When asked about their financial worries, 64% of the broader survey group said rising health-care costs were a top concern, and 57% are worried about whether their retirement assets will last through their lifetime.
Lessons Learned
What was these wealthy boomers' No. 1 piece of advice, relative to saving and investing, for their 30-year-old self? Thirty-four percent said working with a financial adviser or working with one earlier, 27% said being more hands on with their investment portfolio, including adjusting their asset allocation, 19% said planning for long-term expenses such as college tuition, health care and caring for aging parents, and 14% said their advice would be to manage debt better.
And they said they encountered some surprises as they neared retirement: 48% of affluent boomers said that knowing how they want to live in retirement was more important than they'd realized it would be. Fifty-two percent said knowing how to manage retirement income was more important than they'd expected.
Seventy-eight percent of those surveyed said younger people should start planning for retirement no later than their 30s, and 57% said that planning process should start when people are in their 20s.
-Andrea Coombes; 415-439-6400; AskNewswires@dowjones.com
Source: http://online.wsj.com/article/BT-CO-20110131-713537.html