Fewer Mass Affluent Americans Express Concerns About Retirement and Health Care Costs, According to Merrill Edge Report
Mass Affluent Couples Who Talk About Finances or Work With a Financial Advisor Have Greater Confidence They Will Meet Their Financial Goals
Indicating a more stable outlook for one of the fastest growing segments of the economy, concerns about retirement and the cost of health care declined from six months ago among mass affluent Americans (consumers with $50,000-$250,000 in investable assets) according to the Fall 2012 Merrill Edge Report. The Merrill Edge Report, released today by Bank of America, is a semi-annual quantitative and qualitative study of the financial concerns and priorities of the mass affluent.
“We are beginning to see a positive shift in perspective in how mass affluent consumers view their future,” says Dean Athanasia, president of Preferred and Small Business Banking at Bank of America. “This improvement is not just indicative of a changing mindset – we’re seeing our clients take action. Our mass affluent clients are working to gain more control over their future, including the education of their children, by investing more in both retirement and college savings accounts compared to last year.”
The survey also found that college education continues to be a major concern, but this group is also taking greater responsibility for their finances.
-Seventy-three percent of mass affluent fear that their retirement assets will not last throughout their lifetime, down from 83 percent in April 2012, and 84 percent of this group are concerned about the rising cost of health care, also down from 89 percent in the same time period.
-Sixty-nine percent of mass affluent couples discuss their finances at least a few times per month. In fact, more than one-third (34 percent) of married mass affluent Americans are discussing their finances more than their sex life.
-These conversations are leading to greater confidence among mass affluent couples, as 64 percent believe that these ongoing conversations with their spouse or partner will help them achieve their financial goals.
-Generation Y, those 18 to 34 years old, continue to have concerns about their financial future and are the most concerned generation when thinking about the impact of the economy on their ability to meet financial goals at 83 percent (compared to the national average of 75 percent). Yet, they are planning ahead and seeking out financial information and counsel to gain control.
-Half (52 percent) of mass affluent have saved less than $250,000 for retirement. As a result, more than half of respondents plan to retire later than they had one year ago (56 percent), a year-over-year increase of 19 percent from November 2011.
-Three in four (73 percent) mass affluent who are between 10 and 19 years from retirement have made changes to the way they save for retirement over the past year with 36 percent trimming everyday costs to bolster their savings and 21 percent starting to work with a financial advisor.
-Half of mass affluent parents with children who did or will attend college wish they had started saving for their first child’s education earlier (up from 38 percent last year). Yet, only 32 percent are actually saving differently for their second child’s education than they did for their first.
-The rising cost of college remains a concern for 40 percent of mass affluent, and mass affluent with young children are more than twice as concerned (84 percent).
-Despite the rising cost of college education, nearly two-thirds (64 percent) of mass affluent think the cost of college is worth the return on their investment, while only 19 percent believe it is not.
-Managing their investments and planning for their retirement are the top two tasks (both 38 percent) mass affluent have taken on more responsibility for now than in the past, closely followed by managing debt and setting up an emergency fund at 35 percent.
-Three-quarters (76 percent) of mass affluent Americans are seeking some expertise to help them manage important financial tasks. Approximately one-quarter are seeking out expertise to help them properly allocate their portfolio (29 percent), create an overall financial plan (28 percent) and save for their retirement (25 percent), while only about one in ten are consulting an expert for less complex tasks such as setting up an emergency fund (12 percent) and saving for children’s college education (11 percent).
“As the economy continues to improve and the mass affluent take on more and more financial responsibility, they are looking to strike the right balance between managing their finances on their own and seeking out help from a financial advisor,” says Alok Prasad, Merrill Edge executive at Bank of America. “More than half of mass affluent say knowing the right resources to tap is the most complex part of managing their finances. They want financial management to be simplified, advice and guidance to be accessible.”
For a complete, in-depth look at the mass affluent and how this segment is making decisions and taking action based on their life stage, read the entire Merrill Edge Report or watch the Merrill Edge Report video presentation.
Merrill Edge Report Methodology
Ketchum Global Research & Analytics and Braun Research conducted the Bank of America Merrill Edge Report survey by phone between August 20 and August 28, 2012 on behalf of Bank of America. Braun contacted a nationally representative sample of 1,001 Americans in the United States with investable assets between $50,000 and $249,999, and oversampled 300 mass affluent in San Francisco and Los Angeles. The margin of error is +/- 3.1 percent for the national sample and +/- 5.7 percent for the oversample markets, with both reported at a 95 percent confidence level.
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