Wealthy investors changing definition of age and retirement: Study

Wealthy investors don’t see themselves as “old” until they’re 80, and that perception is driving how they save for retirement, according to a survey released Monday by UBS AG.
As life expectancy stretches, about seven in 10 investors don’t see themselves as old until they can no longer live in their homes or drive, rather than when they retire or reach milestone such as having grandchildren or developing ailments such as becoming forgetful.
A majority of investors don’t describe themselves as old until over the age of 80, when nearly eight in 10 consider themselves elderly. Fewer than half of 70-something investors describe themselves as old. (The average American man lives to 76; the average woman lives to 81.)
Emily Pachuta, head of investor insights for UBS Wealth Management Americas, said investors are beginning to see retirement — a period which could last for several decades — in three distinct phases: an active period of continued work or volunteering, a period of travel and leisure in the decade that follows, followed by a period of decreased independence and increased health concerns.
Individuals’ financial needs might vary dramatically during each of those periods. Lifestyle and income preservation are important to more than half of investors in the first two phases, while health care and long-term-care expenses take center stage in later years.
“We need as an industry to start thinking about different income needs by phase,” said Ms. Pachuta.
The survey was taken Sept. 24 to 30, amid heated political wrangling over federal spending. Though they have little faith in politicians to have a positive impact on the economy, rising home prices led to greater optimism among investors about their own holdings. While they ranked politics as their greatest concern, nearly two-thirds described their personal finances as excellent or very good, virtually unchanged in six months, according to the UBS report.
“It didn’t really impact investors’ confidence or optimism in their ability to reach their own financial goals,” Ms. Pachuta said. “And it did not impact their current investments or the cash that they were holding.”
Traditionally retirees are told to budget for 78% of their work-life income in retirement, but the survey found that investors estimated needing just 56% to 63%, according to UBS.
Six in 10 investors have either aging parents or young adult children, and 15% have both, according to the survey. The so-called “sandwich” generation is taking an increasing role in financing and planning goals for their parents and adult children.
“They’re writing checks, and they like doing so,” said Ms. Pachuta. “It’s important for a financial adviser to really understand that not only are they advising their clients, but they could also play the role of advising clients to advise others.”
Nearly a quarter of the investors surveyed make all of their parents’ financial decisions, according to the survey, while more than eight in 10 consult their adult children on their finances at least occasionally.
UBS’ results are based on a quarterly online survey of 2,319 Americans with at least $250,000 in investible assets and some responsibility over their financial planning.

Related Topics: UBS Wealth Management