Millionaires worry more about the financial situations of their children and grandchildren than they do about their own security. How do family affairs shape their financial planning strategies?
The well-being of children and grandchildren now ranks as the top personal financial concern of Millionaire investors, according to Millionaire Corner research. How does this growing worry shape the financial planning strategies of these wealthy investors?
More than two-thirds (68 percent) of Millionaires surveyed over the first quarter of 2012 said they were worried about the financial situations of their children and grandchildren, up from 57 percent a year earlier. Nearly two-in-five identify the educational costs of their grandchildren as a concern, up from 30 percent last year. (Millionaire Corner research shows that one of every five affluent retirees is helping a grandchild through college.)
Wedding costs are also likely to affect the financial planning strategies of Millionaires investors, who have a net worth of $1 million to $5 million, not including primary residence. Nearly 48 percent of Millionaires have helped pay for a child’s or grandchild’s wedding in the past, and more than 40 percent plan to do so in the future, according to a survey conducted by Millionaire Corner in May. (Millionaires help pay for weddings, even though the vast majority believes they’ve become too lavish, according to our research.)
These college and wedding costs – as well as other expenses – are hitting later in life for most Millionaires and, as a result, complicate their financial planning strategies and cash flow in retirement. More than 80 percent of these affluent investors are older than 55, and the vast majority is retired or semi-retired.
Given their age, retirement status and family concerns, the financial planning strategies of millionaires are most heavily influenced by the desire to minimize investment risk. Millionaires rank risk as the most important investment selection criteria (92 percent), followed by the closely related factor of diversification (91 percent), according to our first quarter study. Nearly half (49 percent) says it’s more important to preserve wealth than grow assets in the current economic environment.
Millionaires also express growing concerns over the prolonged economic downturn, and rank the economy as their top national concern. Our research indicates issues such as the federal deficit and European debt crisis also influences Millionaires to adopt more conservative financial planning strategies.