Being Rich Doesn't Save HNWIs From Retirement, Illness Worries - Study

Tom Burroughes

21 April 2017

High net worth individuals aren’t free from financial worries about serious illness and retirement costs and a significant chunk of them don’t think they are prepared to cope with rising longevity, a survey in the US shows.

Merrill Lynch and Age Wave, a think tank exploring effects of aging populations, finds that 88 per cent of 202 HNW individuals said “health disruption” is their greatest threat to financial peace of mind.

Economic concerns, meanwhile, come a close second with wealthy individuals citing rising tax rates, a downturn in the stock market and negative news as dominant financial worries, the survey showed. Another worry is that wealthy retirees aren’t discussing important financial matters openly and only 5 per cent said they can do so.

The survey, conducted in August last year, chimes with a recent Spectrem study showing that even ultra-high net worth individuals aren’t free from worries about having enough to live on in retirement.

While HNW US citizens are more likely to feel financially prepared for a lengthy retirement, three in 10 of those 50-plus pre-retirees with $5 million or more in assets do not feel financially prepared to fund a retirement that lasts 30 years. Such individuals are more likely than the general population to define financial peace of mind as “feeling confident I won’t outlive my money” .

Wealthy individuals would be less likely to consider cutting back on financial support to family members, including siblings , children , grandchildren , and parents/in-laws .

Death and taxes
As well as showing that health-based costs are the top financial worry of retirement for HNW citizens, the report also showed that 69 per cent of them say their top financial worry in retirement is that they or a loved one will have a costly health issue.

Compared to the general population, HNW individuals are more likely to say rising tax rates and a downturn in the stock market are top retirement financial worries.

Such persons are also more likely to cite negative news in the media about the economy as a worrisome factor .