RSS Facebook Twitter LinkedIn

Featured Advisor

Ed Meek
CEO/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, playing and following basketball, playing golf, and participating as an advisory board member for Breakthrough Urban Ministries.

Click to see the full profile

Share |

Affluent Investors Show a Sophisticated Understanding of Retirement Planning

Reveal high rates of financial literacy for issues surrounding financial planning

Millionaire investors possess a high financial IQ when it comes to retirement planning, according to recent research conducted by Spectrem Group.

“The wealthy tend to be savvy investors. This sophistication extends to concepts surrounding retirement planning,” said Catherine McBreen, managing director of Spectrem. “Millionaires understand the importance of educating themselves about various financial products and managing investment risk in their portfolios so that they can live comfortably in retirement.”

More than 93 percent of millionaires with a net worth of $5 million or more - not including their primary residence – say it’s important to understand that asset allocation is a key retirement planning strategy. Asset allocation spreads investment risk over a variety of products, such as stocks, bonds and real estate, to maximize gains.

More than 92 percent of these high net worth individuals say it’s important to be knowledgeable about the various investment products that make up a portfolio. Investments fall into “classes,” such as stocks, and “subclasses,” such as technology stocks or international stocks. Market conditions can boost one investment while handicapping another. A weak dollar, for example, can improve the performance of companies that are big exporters, but can reduce demand for U.S. bonds.

Calculating the amount of money needed to live comfortably in retirement is also important, according to 93 percent of the mega-millionaires. This may sound obvious, but a recent retirement study by the Employee Benefits Research Institute found that nearly 60 percent of American workers have failed to set retirement savings goals. Nearly 30 percent have saved less than $1,000 – not including their home – and 56 percent has saved less than $25,000.

A key component of retirement planning is developing a clear understanding of expenses during retirement, say more than 92 percent of high net worth investors. Many Americans believe their costs will go down significantly in retirement, but research shows that retirees require up to 85 percent of their income before retirement. Expenses such as housing tend to decrease as investors age, but health care costs can increase significantly. Inflation also poses a threat to retirement income.

Ninety percent of millionaire investors say it’s important to understand how tax laws affect retirees, and more than 88 percent feel that investors need to get a better understanding of how to schedule withdrawals from Social Security and 401(k) retirement accounts. Investors who delay withdrawals can receive higher monthly payments over the long term. More than 92 percent say it’s important for beginning investors to take full advantage of their employer’s 401(k) retirement plan.