When it comes to saving for their retirement, the mass affluent are looking to get ahead of the curve. Instead of paying off immediate debt, this group has shifted its financial priorities post-downturn to longer-term investments for retirement.
A new report from Merrill Edge focusing on the mass affluent, or those with between $50,000 and $250,000 of investable assets, also found men anticipating saving a great deal more - $232,000 - than women in this category, despite the fact that both plan to retire at the age of 66.
The survey was conducted by Braun Research among 1,016 Americans in the U.S. with between $50,000 and $250,000 of investable assets.
Dave Richmond, president and founder of retirement consulting firm Richmond Brothers, Inc., says this group is the first to be squeezed by both parents and children, and is also being confronted with a changing work environment.
“They are technologically overwhelmed, and the pace of change in the workplace is changing very fast,” Richmond says. “Our clients who are 55 to 65 are tired of learning new systems every few years. They find the company they have been at for 30 years isn’t the same company anymore, so all of these things put retirement higher up the priority chain.”
Retirement goals nationwide also widely vary, the Merrill report found. Those in the Western part of the country have set their goals the highest, planning to save more than $1 million for retirement, while those in the Northeast had much more modest goals of saving around $500,000 for retirement. The mass affluent in the South anticipate saving $780,000 and those in the Midwest plan to save $595,000.
Despite anticipating high rates of savings for retirement, the mass affluent don’t have that much cash put away for their nest egg just yet. The Merrill Edge survey found this group anticipates saving more than $700,000 although they currently have only around $160,000 saved, on average.
Richmond says it’s likely they dipped into retirement savings during the downturn, which is why their actual savings and goals for savings are so varied.
“If they or someone in their family lost a job, they could have tapped into their retirement savings,” he says. “And Americans are also very poor savers. What’s shocking to me is that clients don’t say when they are 30, ‘how much do I have to have to retire?’ and start saving money and monitoring the plan to get where they need to be.”
This discrepancy between goals and actual savings may also be because so many in this group are allowing their children to live at home, and in some cases even their grandchildren. Respondents plan to contribute financially to their family members by helping pay for their children’s college (41 %), establishing a savings account for their grandchildren (34%) and letting their children live at home after high school or college (27%).