Even relatively wealthy Americans have begun to significantly cut back on spending. More than half of affluent investors have downsized their lifestyle over the past year, according to a new Merrill Lynch Wealth Management telephone survey of 1,000 Americans with investable assets of $250,000 or more.
These relatively wealthy investors have recently taken steps to reduce energy costs (48 percent), slashed spending on personal luxuries (43 percent), and vacationed less (30 percent). But cutting costs hasn’t been their only focus. Many savers are also paying more attention to their personal finances. The survey respondents say they have recently become more aware of their day-to-day cash flow (38 percent), realized they have to scale back either their current or retirement lifestyle (23 percent), and decided to pay more attention to their retirement investments (19 percent).
Just over a quarter (29 percent) of the affluent workers in the survey expect to delay retirement. “When people look at the retirement of past generations, frankly that’s as attractive to them as a 1970's leisure suit,” says Andy Sieg, head of retirement and philanthropic services at Bank of America Merrill Lynch. “Today, the transition into retirement is tending to be more gradual and fluid.” Top retirement fears include rising health care costs (56 percent), ensuring retirement assets last throughout their lifetime (53 percent), inflation (48 percent), and affording a desirable retirement lifestyle (48 percent).
The survey also asked retirees how they wish they had planned for retirement differently. Many seniors say they should have focused more on how they wanted to live in retirement (38 percent), started working with a financial adviser earlier (23 percent), given up more luxuries in order to reach their retirement goals (18 percent), and diversified their portfolio more (18 percent).
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The retirees advise those within 10 to 15 years of retirement to:
- Decide what is most important to you in retirement (51 percent)
- Have a plan to manage income throughout retirement (47 percent)
- Pay down debt (40 percent)
- Account for unexpected costs and risks (38 percent)
- Pursue home ownership (24 percent)
- Be cautious of taking investment risks (21 percent)