The best and worst financial decisions of millionaires – as well as their greatest fears – all relate to retirement. How are affluent investors addressing the issue?
The best and worst financial decisions of Millionaires – as well as their greatest fears – all relate to retirement, according to Millionaire Corner research that suggests a significant share of Millionaires could benefit from creating a holistic retirement plan.
Millionaires ranked “making consistent investment s in a retirement plan” to be the best of their financial decisions, according to a monthly survey conducted in May. More than 38 percent say they consider these contributions to be their best financial move, compared to 25 percent who placed a higher premium on having a frugal lifestyle and about 13 percent who said buying a home was the best among financial decisions.
Retirement concerns also ranks as a key regret among Millionaires. More than 8 percent consider “not saving enough for retirement” to be their greatest financial regret, second only to not making good stock picks (10 percent) or putting too much money into a house (4 percent). (Our research also shows that the majority of Millionaires have no financial regrets at all.)
Retirement issues also figure prominently in the worst financial fears of Millionaires. More than 38 percent worry about losing the ability to make financial decisions in old age, while 37 percent worry about running out of money in retirement and 14 percent worry about having their children take care of them in their old age.
Despite significant regrets and fears over retirement security, our research also shows that close to half of Millionaires lack formal retirement plans. A study completed over the third quarter of 2011 shows that only 52 percent of Millionaires have discussed saving for retirement with their financial advisor, or worked with their advisor to create a written financial plan. Only half have discussed creating a sufficient cash flow to meet their retirement needs and only 26 percent have talked to their advisor about planning for their long-term care. One-fourth has received advice about establishing an estate plan and 17 percent has discussed the role of insurance products to meet financial goals.
About 84 percent of Millionaires use financial advisors at all, but prefer the services of a full service broker. About 18 percent prefers to work with an independent financial planner and 8 percent prefers to work with a registered independent investment advisor.
Our research suggests that close to half of Millionaire investors could benefit from establishing a holistic financial plan that considers retirement needs, along with other life goals. An individual retirement plan factors such variables as years to retirement, income needed in retirement and the amount of savings needed to reach the stated goals. Investors guided by a formal plan are more likely to make sound financial decisions, and less likely to have financial regrets.