Merrill Edge® Report Finds Retirement Is
Becoming an Opportunity to Pursue Passions, but How to Get There
Varies Across Generations
Millennials’ perspective on their later years and how to get
there hints at a possible redefining of retirement, according to
the latest Merrill Edge® Report. Nearly half (41 percent) of the
generation surveyed expects to retire when they hit a certain
financial milestone or savings goal, whereas their older
counterparts are focused on leaving the workforce when they hit a
certain age or can no longer work due to health concerns.
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Spring 2016 Merrill Edge Report -
Retirement Drivers
The survey of more than 1,000 mass affluent Americans reveals
that the largest generation in today’s workforce has a different
view on retirement, alluding to a potential shift of the life
milestone in the years to come. For millennials, retirement is more
than a time for rest and relaxation – it’s a time full of
possibilities.
The majority (53 percent) of millennials view retirement as the
start of something exciting. In comparison to their elders, 21
percent of millennials are more likely to make pursuing a passion
(10 percent), furthering their education (7 percent) or
starting/growing their own business (4 percent) their priorities in
retirement.
Also looking toward the future, 47 percent of millennials
believe the outcome of the 2016 presidential election will have a
positive impact on their long-term financial goals, higher than any
other generation.
“It’s refreshing to see the mindset around retirement evolve,
particularly a strong optimism and a goal-oriented approach from
younger generations,” said Aron Levine, head of Merrill Edge at
Bank of America. “This focus is a great start, but one of the keys
to a successful retirement is to ensure savings are prioritized
early and often. Year over year, we continue to see today’s
non-retirees struggle with the impact short-term spending has on
their long-term financial future.”
Savings shortcomings
While millennials are taking a goal-oriented approach toward
their retirement, they align with Americans overall in thinking
they could be more proactive. Nearly half (48 percent) of Americans
say they are most insecure about some aspect of their finances
(financial future, retirement savings or income), with retirement
savings (21 percent) being one of their top insecurities, ahead of
their personal relationships (10 percent), judgment of others (6
percent) and career path (4 percent).
Americans also cite that daily expenses in retirement will
dominate their financial future (28 percent), more so than managing
health care expenses (17 percent) and housing expenses (17
percent).
And, despite these strong sentiments, they still don’t seem to
prioritize retirement savings. When asked how proactive they were
about planning for retirement, nearly two in five (38 percent)
award themselves a grade of “C” or lower and only 18 percent give
themselves an “A.”
“It has become increasingly apparent that retirement planning is
not only evolving, but also has become a moving target that
Americans must continuously revisit to pursue their goals and
priorities,” said Ken Dychtwald, Ph.D., founder and CEO of Age
Wave. “As we see in the latest Merrill Edge Report, retirement
planning requires a new mentality – ‘set it and forget it’ is a
thing of the past. As millennials are envisioning living very long
lives, this study reveals the new priorities they have for work,
leisure, success and money as they are coming to realize that
everything they do today, financially speaking, can impact the
lives they’re hoping to live in retirement.”
Retiree realities
These savings shortfalls may be indicative of the retirement
today’s retirees are living. When asked what they have done in
retirement that they didn’t expect to, retirees’ top response was
“spent more money than anticipated” (30 percent), followed by
“moving to a new location” (19 percent) and “feeling a lack of
purpose” (18 percent).
Top priorities of retirees also seem to differ from those of
non-retirees. The retirees’ top priorities include maintaining
their standard of living (29 percent), followed by spending time
with loved ones (27 percent) and maintaining their health (23
percent). Despite that nearly one in five non-retirees hope to make
traveling the world their top retirement priority, only 5 percent
of retirees have prioritized traveling.
“Today’s retirees tell us they are experiencing a very different
retirement than non-retirees are envisioning,” said Levine. “With
continuing savings challenges and potential economic uncertainties
ahead, non-retirees should have a plan in place and regularly
revisit it to make sure it still aligns with what’s most important
to them for their retirement years.”
For more in-depth information about the financial behaviors and
priorities of mass affluent Americans, read the entire Spring 2016
Merrill Edge Report here. A complementing infographic is available
here, and a video is available here.
Merrill Edge Survey MethodologyBraun Research, Inc. conducted a
nationally representative telephone survey on behalf of Merrill
Edge. The survey was conducted from February 12 through March 1,
2016, and consisted of 1,003 mass affluent respondents throughout
the U.S., defined as individuals with investable assets (value of
all cash, savings, mutual funds, CDs, IRAs, stock, bonds and all
other types of investments excluding primary home and other real
estate investments). Respondents in the study were defined as aged
18 to 34 (millennials) with investable assets between $50,000 and
$250,000 or those aged 18 to 34 who have investable assets between
$20,000 and $50,000 with an annual income of at least $50,000; or
aged 35-plus with investable assets between $50,000 and
$250,000. We conducted an oversampling of 300 mass affluents
in the following markets: San Francisco; Los Angeles; Orange
County, California; Dallas; New Jersey; South Florida; Chicago;
Atlanta; and Phoenix. The margin of error is +/- 3.0 percent for
the national sample and about +/- 5.7 percent for the oversample
markets, all reported at a 95 percent confidence level.
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