Rich Americans confident on money management, but not so much about retirement

Affluent individuals estimate they’d need a $3M retirement nest egg, and just half are prepared to transfer their wealth.

A new study by First Citizens Wealth, the wealth management division of First Citizens Bank, pulls back the curtain on well-heeled Americans’ sentiments toward money management and planning for the future.

The “Beyond Wealth” study, which surveyed individuals with more than $500,000 in investable assets, revealed most are confident in their money management skills, but are less prepared for transferring wealth to heirs.

“Our inaugural study sheds new light on how affluent Americans are looking at their money management and their attitudes toward retirement, estate planning and wealth transfer,” Michael Wilson, executive vice president and lead executive for First Citizens Wealth, said in a statement.

The study found that two thirds of affluent Americans believe they manage their finances better than others, with only 4 percent thinking they do worse. Beyond that, about half of the respondents not feeling stressed about their finances and three-quarters having an updated written financial plan.

However, the study hints at significant gaps when it comes to retirement and passing down their wealth.

While most affluent Americans expect to retire in their 60s, nearly 1 in 5 are uncertain about their retirement timing, with 44 percent saying the main issue is maintaining their lifestyle during retirement. All in all, they estimate they’d need $3 million to retire comfortably, twice the amount estimated by a recent Northwestern Mutual survey of Americans, and $5.5 million to retire and pass down wealth to heirs.

While nearly all affluent Americans (94 percent) plan to transfer wealth to their heirs, only 50 percent feel very prepared and have a written plan in place. About 44 percent have considered passing on their wealth but lack a formal plan. Additionally, only two-thirds have a will, and just 40 percent have an estate plan.

The survey also revealed a widespread appreciation for financial advisors. Nine-tenths of respondents (89 percent) acknowledged that they have generated more wealth with a professional advisor behind than they could have alone.

They also cite feeling more prepared for the future (66 percent), reduced stress (58 percent), saved time (45 percent), and being able to focus on what matters in life (43 percent) as key benefits of working with advisors.

“There is more conversation around wealth planning than ever, and younger generations are getting more involved through social media, podcasts and other digital platforms,” Wilson added. While most affluent Americans start engaging with an advisor in their 30s on average, First Citizens found the average millennial gets started at age 29, compared to 36 for Gen X and 43 for baby boomers.