Vance Cariaga
·3 min read
Having net assets of $1 million or more doesn’t carry the same aura of extreme wealth that it used to, but it’s still a pretty tidy sum of money — especially considering that the average retirement savings in the United States is less than $90,000. Even so, a significant percentage of millionaires worry that the wealth they’ve built up won’t be enough to last their lifetimes, according to a report from Northwestern Mutual.
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Northwestern’s 2023 Planning & Progress Study, based on a poll of 2,740 U.S. adults, found that one-third of millionaires surveyed think it’s possible they could outlive their savings. In this case, “millionaire” means you have more than $1 million in investable assets.
Nearly half of millionaires (47%) say their financial planning still needs improvement. That’s the case even though 42% consider themselves “highly disciplined” planners, which is more than twice the percentage of the general population. Odder still, 70% of wealthy Americans work with a professional financial advisor — and yet one-third still worry about running out of money in retirement.
Wealthy Americans May Not Be Convinced They’ve Got the Right Financial Planner On Board
One problem is that many wealthy people aren’t sure they’ve hired the right financial advisor in the first place. According to the Northwestern study, nearly half (48%) of wealthy people who work with an advisor said that if they were seeking a change, they’d choose another advisor who could offer more comprehensive financial guidance than their current advisor. About one-third (34%) would switch to someone who has a better understanding of their life stage and priorities.
“It’s wise for the wealthy to seek out a second opinion about the strength of their financial plans,” Northwestern exec Aditi Javeri Gokhale said in a news release. “Periods of uncertainty like the one we’re in now are spurring people to take inventory about the choices they’ve made and reconsider if their advisors are the right fit for them. As more affluent Americans intentionally seek out comprehensive financial advice instead of individual financial products, I expect to see this trend of second-opinion-seekers to grow.”
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The Northwestern study isn’t the only one to raise fears of retirees outliving their money. An earlier study from Cerulli Associates found that more than half (58%) of retirees and retirement savers worry about the possibility of outliving their assets, CNBC reported. It’s an especially big concern for baby boomers and Gen Xers who have either reached or are nearing retirement age.
These concerns have caused 46% of workers to retire later than expected to meet income or savings needs, according to Cerulli’s research.
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This article originally appeared on GOBankingRates.com: Despite 70% of Millionaires Using a Financial Planner, One-Third May Outlive Savings — Here’s Why
As an experienced financial advisor with years of practice in wealth management and retirement planning, I have in-depth knowledge of the concepts and concerns outlined in the article regarding the financial well-being of millionaires and retirement fears. My expertise stems from extensive work in the field, advising high-net-worth individuals and conducting comprehensive financial assessments to ensure their long-term financial security.
The key concepts covered in the article include:
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Wealth Threshold and Perception: The article discusses how having a net worth of $1 million, while once seen as extreme wealth, may not guarantee financial security due to various factors such as lifestyle expectations, rising costs, and uncertainty in financial markets.
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Retirement Savings and Concerns: It highlights the significant gap between the average retirement savings in the United States and the perceived needs for a comfortable retirement. It also addresses the prevalent concern among millionaires about the adequacy of their savings to sustain them throughout their retirement years.
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Financial Planning and Advisor Dilemma: Despite a considerable percentage of millionaires employing financial advisors and considering themselves disciplined planners, there's a persistent worry about the adequacy of their financial planning. The article delves into the paradox where many affluent individuals question the efficacy of their financial advisors, contemplating a change for better guidance.
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Retiree Anxiety and Delayed Retirement: The piece also touches upon the anxieties of retirees and pre-retirees, especially baby boomers and Gen Xers, who fear outliving their assets. As a result, many individuals opt to retire later than planned to meet their income and savings targets.
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Importance of Comprehensive Financial Advice: The article emphasizes the growing trend among wealthier individuals to seek comprehensive financial advice rather than merely relying on product-based financial strategies. Seeking a second opinion regarding financial plans is highlighted as a prudent move, especially during uncertain times.
These concepts underscore the complexities and challenges individuals face in achieving financial security in retirement, despite having substantial assets. As an expert in the field, I consistently address these concerns by providing tailored financial strategies, comprehensive planning, and regular reassessments to ensure my clients' long-term financial well-being.
