Merrill Lynch Affluent Insights Quarterly Survey Finds the Vast Majority of Baby Boomers Intend to Live a More Active Retirement Lifestyle Than Their Parents

Affluent Women Aspire to Be Even More Active During Their Retirement Years Than Men, Yet Have Greater Concerns and Less Confidence About This Stage in Life

NEW YORK--()--Today, Bank of America released its latest Merrill Lynch Affluent Insights Quarterly, a survey examining the values, financial priorities and concerns of affluent Americans. The latest in a series of quarterly surveys looks at a range of opportunities and concerns associated with retirement – a stage of life being redefined by recent retirees and those preparing for it in the years ahead. The survey also offers lessons learned and advice from retirees, reveals gender differences in retirement lifestyle aspirations, and examines the important roles that financial advisors and employers play in helping individuals live well longer.

The survey finds that the vast majority (84 percent) of affluent Baby Boomers (age 46 – 64) believe their “retirement” will differ from that of their parents, among which 86 percent intend to live a more active lifestyle and 72 percent believe they will enjoy a higher standard of living during retirement than their parents did. Seventy percent of these Baby Boomers plan to keep working, at least part-time, as a means of remaining active and engaged during this stage in life. Other ways in which Baby Boomers look forward to staying active during their retirement years include:

  • Pursuing additional professional success (32 percent)
  • Continuing their education (26 percent)
  • Learning a new trade (24 percent)
  • Starting or furthering their own business (20 percent)

“People today are living longer, healthier lives, and are able to enjoy not just years but decades more time with family and friends,” said Sallie Krawcheck, president of Bank of America Global Wealth and Investment Management. “This presents new opportunities as well as challenges. We are committed to helping our clients attain the lifestyles they aspire to and leave the legacy they hoped for by offering personalized advice and financial solutions to help put them on the right path early on and keep them on track throughout their lifetime.”

Lessons Learned and Advice Shared by Affluent Retirees

Nearly half (48 percent) of retirees, when looking back, found that having a clear vision for how they want to live during their retirement years, as well as knowing how to manage retirement income to ensure it lasts throughout their lifetime (52 percent), was more important than they had originally expected. Other lessons learned and advice shared by affluent retirees in this survey includes:

  • Seventy-eight percent recommend that individuals should begin to plan financially for the life they want to live in retirement no later than in their 30s, and 57 percent recommend starting this planning process in their 20s.
  • Twenty-seven percent of affluent retirees did not retire at the age they had planned to when they were in their 40s, citing a variety of factors, including:
    • The recession took a toll on my finances (34 percent)
    • Changed my mind and decided to continue working (23 percent)
    • Had to provide more financial support to my adult age children than anticipated (23 percent)
    • Didn’t realize how much I would need to save for retirement (21 percent)
    • Started saving too late or didn’t save enough (18 percent)
    • Had to deal with a medical emergency (14 percent)
  • When retirees were asked the number one piece of long-term saving and investing advice they would give to their 30-year-old self, 34 percent recommended working with a financial advisor or working with one earlier in life. Other advice included taking a more hands-on approach to their investment portfolio such as monitoring asset allocation and making adjustments based on life stage (27 percent), factoring long-term expenses such as college tuition, health care and caring for aging parents into their financial strategy (19 percent), and better managing debt (14 percent).

“The retirement marketplace has changed dramatically already and even before the crest of the Baby Boomer wave hits the beach,” says Andy Sieg, head of Retirement Services for Bank of America Merrill Lynch. “We are responding to the magnitude of this demographic shift, as must other industries, by making the changes to our business that will enable us to offer age-friendly services and help this huge population of people live well longer.”

Gender Disparities Surrounding Retirement Opportunities and Concerns

Overall, top financial concerns among the affluent continue to be the rising cost of health care (64 percent) and ensuring their retirement assets will last throughout their lifetime (57 percent). These concerns are more prevalent among women, 70 percent of which are worried about health care costs and 63 percent about the longevity of retirement assets, compared to 57 percent and 52 percent of men respectively.

While 42 percent of affluent non-retirees indicate having full confidence in their ability to meet their long-term financial goals, this percentage drops to one-third (34 percent) among women compared to half (49 percent) of men. When all affluent non-retirees were asked what gives them confidence in their ability to meet long-term goals, they cited being heavily involved in their financial decisions (79 percent), setting realistic retirement goals (76 percent) and having a diversified portfolio (69 percent). Other notable gender differences were found in retirement lifestyle aspirations of non-retirees, including:

  • 86 percent of women plan to spend time traveling, compared to 66 percent of men
  • 74 percent of women plan to enjoy a hobby, compared to 60 percent of men
  • 64 percent of women plan to be more involved in their community, compared to 43 percent of men
  • 62 percent of women plan to dedicate more time to philanthropic endeavors, compared to 41 percent of men
  • 24 percent of men plan to start or further their own business, compared to 14 percent of women

Conservative Investing: Knowledge Needed

Today, nearly half (47 percent) of affluent Americans describe themselves as conservative investors, favoring a mix of low and moderate risk investments designed to deliver steady, modest gains, rather than those that might potentially produce higher returns but carry more risk. A notably greater percentage of younger affluent investors ages 18 – 34 (mean age = 31) (59 percent) describe themselves as conservative than do individuals ages 35 – 64 (41 percent).

Two-thirds (66 percent) of all investors who view themselves as conservative believe this investment approach will help shield them from losses during market fluctuations. However, only a quarter (25 percent) of this group recognizes that they may be sacrificing opportunities for investment growth during stronger market conditions. Even fewer (10 percent) realize that conservative investing may impede their ability to meet their retirement goals, and 15 percent admit simply not knowing the long-term effects of conservative investing.

“These days, investors remain much more concerned about avoiding unnecessary risk, particularly younger investors, in the face of ongoing economic uncertainty, high unemployment, and in the wake of two of the most severe bear markets in history,” said Lyle LaMothe, head of U.S. Wealth Management for Merrill Lynch Wealth Management. “Our Financial Advisors are keenly attuned to our clients’ needs for asset preservation and for greater protection from market volatility, while working closely with them to ensure that current perspectives on risk don’t hinder their pursuit of long-term goals.”

Financial Advisors and Employers Play Important Roles in Retirement Success

The survey found that among affluent non-retirees working with a financial advisor, two-thirds (67 percent) say the relationship has given them confidence in their ability to meet their long-term financial goals.

In addition to helping to ensure that their investments were properly allocated to meet long-term goals (60 percent), affluent retirees cited the following as the most valuable pieces of advice they received from their financial advisor when preparing for retirement:

  • Knowing how much I would need to live the life I want in retirement (22 percent)
  • Knowing how best to incorporate Social Security into retirement planning (18 percent)
  • Helping to define how I want to live in retirement (15 percent)
  • How to convert investments into an income stream and manage spending (14 percent)

Nearly a quarter (23 percent) of affluent retirees say that they speak with their financial advisor more now that they are retired, with 65 percent doing so just as frequently as before they retired. The survey also found that 42 percent of affluent retirees speak to their financial advisor at least monthly, compared to 32 percent of non-retirees.

Employers also play a very important role in helping individuals successfully prepare for retirement. In fact, 62 percent of affluent employees with retirement benefit plans available to them (such as 401(k) or 403(b) plans) rely solely or heavily on these vehicles when saving and investing for retirement. Access to financial education is also important. Of the affluent employees that have access to financial education in the workplace, 70 percent take advantage of it, and among those that do not have access 49 percent would take advantage of it if it were made available to them.

When asked what employers could do to help make managing their personal finances easier, affluent employees cited:

  • More intuitive online tools to help them manage all their banking and investment needs (30 percent)
  • Financial seminars relevant to their life stage (26 percent)
  • More relevant research or literature to help inform investment decisions (23 percent)
  • Access to a one-on-one relationship with a financial advisor (22 percent)

“As people live longer, more active lives, their need or desire to keep working will transform the workplace in positive ways, and the skills and experience of this aging workforce will aid in the ability of the U.S. to compete globally,” added Sieg. “This transformation will require an investment in human capital that expands the traditional parameters and flexibility in how employers help workers prepare for later life. To this end, we are helping employers deliver the benefits, financial education programs and services that employees at every life stage and at every level of their organization are seeking.”

Affluent Insights Quarterly Methodology

Braun Research conducted the Merrill Lynch Affluent Insights Quarterly survey by phone between December 8, 2010 and January 1, 2011, on behalf of Merrill Lynch Global Wealth Management. Braun contacted a nationally representative sample of 1,000 affluent Americans with investable assets in excess of $250,000, and oversampled 300 affluent Americans in each of 15 target markets including Atlanta; Boston; Chicago; Dallas; Detroit; Los Angeles; Houston; Philadelphia; Phoenix; Miami; Minnesota-St. Paul; Orange County, Calif. (Irvine, Laguna Hills and Newport Beach); San Diego; San Francisco; and Washington, D.C. The margin of error is +/- 3.1% for the national sample and +/-5.7% for the oversample markets, with both reported at a 95% confidence level.

Bank of America

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Reporters May Contact:
Matt Card, Bank of America, 1.617.434.1388


Reporters May Contact:
Matt Card, Bank of America, 1.617.434.1388