Most millionaires aren’t planning to use their wealth to finance a traditional retirement. Some 60 percent of individuals with over $1.5 million saved envision working in some form for as long as they can, according to a new Ledbury Research survey commissioned by Barclays Wealth.
Those who made their money through entrepreneurship (68 percent), property (68 percent), and investment gains (64 percent) are the most likely to plan to continue being involved in commercial or professional work for the rest of their lives, the survey of over 2,000 individuals with more than $1.5 million in investable assets in 20 countries found. Individuals who inherited (57 percent) or earned their money through wages (58 percent) are more likely to be considering retirement, but a majority still plan to work indefinitely. People under age 45 (70 percent) are the most likely to be considering working as long as they can. The number of people planning to never retire gradually declines among older age groups to half of those age 65 and older.
Very few wealthy individuals in emerging market economies such as Saudi Arabia (8 percent), United Arab Emirates (9 percent), and South Africa (12 percent) plan to stop working completely. Those most likely to desire a conventional retirement generally reside in Switzerland (66 percent), Spain (56 percent), and Japan (54 percent). In the U.S., just under half (46 percent) of wealthy individuals are planning for a traditional retirement. Some of these retirement preferences can be explained by age differences. The majority of millionaires in emerging markets are under age 45, compared to a minority of young millionaires in developed countries.
Among the survey respondents who are already retired, most chose to leave their work because they have enough money to do so (58 percent) and have ill health (51 percent). A desire to do something different (41 percent) was also a popular reason for retiring. But even though they call themselves retired, 40 percent of these wealthy individuals are still working part time.
One of the major reasons millionaires are reluctant to retire is the unpredictability of retirement costs. Most retirement savers say they can predict the amount of money needed to maintain their current lifestyle in retirement (73 percent) and have decided where they want to live (81 percent). But far fewer affluent individuals feel that they can predict the rate of return they will receive on investments (46 percent), what their health care costs will be (46 percent), and the health of the economy (36 percent). Interestingly, over 70 percent of survey respondents in emerging markets including Saudi Arabia, Latin America, and India think future investment returns are predictable, compared to just over a quarter of investors in Japan and the U.K. Younger investors also generally have more confidence in stock market returns than older investors.
Many millionaires are also uncertain about how their tax rates will change in retirement (46 percent). Most people in Switzerland (73 percent) and Hong Kong (70 percent) are fairly confident that their tax rate will stay the same in retirement. Far fewer workers in the U.K. (34 percent) and Ireland (30 percent) feel like they can predict how much they will pay in taxes in retirement.
The number of affluent people who wish to pass on their wealth to heirs varies considerably by country. Individuals in emerging markets including Qatar (94 percent), United Arab Emirates (91 percent), and Monaco (91 percent) are considerably more likely to desire to pass on wealth to their children than people in Japan (42 percent) and the U.S. (62 percent), the two countries least likely to do so. Respondents in emerging markets were also the most confident that the next generation of family members will be better off financially. Millionaires in developed nations are generally the least likely to feel that their children will be wealthier than they are.