Mass Affluent Americans Push Back Retirement Date And Take Steps To Get On Track In Greater Numbers

Fifty-seven percent of working mass affluent Americans expect to retire later than they planned a year ago, according to the latest Merrill Edge Report. This shows a 36 percent increase from January 2011. The 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 (consumers with $50,000-$250,000 in investable assets).

“While the economy is showing signs of a turnaround, our data indicates the outlook among the mass affluent is not quite as positive,” says Dean Athanasia, Preferred and Small Business executive at Bank of America. “In spite of their increased efforts to get on track, this group is pushing back their retirement in greater numbers than we’ve seen before.”

Balancing short- and long-term finances

Balancing their short- and long-term finances continues to be one of the greatest challenges for the mass affluent. The data shows an increase among those who admit to tapping into their long-term savings or investments to meet short-term financial needs (34 percent) than previously seen in November 2011 (27 percent). Additional findings include:

• Long-term finances pose greatest concern: The greatest financial concerns among the mass affluent revolve around long-term issues, including the rising cost of health care (89 percent), ensuring retirement assets last throughout their lifetime (83 percent), and being able to afford the lifestyle they want in retirement (80 percent).
• Issues take precedence over candidate: While the mass affluent are concerned with the upcoming presidential election (71 percent), they show greater concern with the issues, such as health care legislation (80 percent), the future of Social Security benefits (77 percent) and the U.S. government’s budget deficit (77 percent).
• Parents paying more for child’s education: Fifty-six percent of mass affluent parents have paid or expect to pay more to send their first child to college than they had expected when the child was first born. When asked why, those who currently have a child in college or that has graduated, 64 percent say the college or university was more expensive, while 32 percent want to keep their child out of debt.
• Focusing on financial management: The mass affluent plan to focus on financial management tasks in the next six months more so than seen in the Fall Merrill Edge Report, such as: budgeting (85 percent), up from 67 percent in November; balancing short- and long-term finances (71 percent), up from 55 percent; and saving for retirement (68 percent), up from 49 percent. In addition to these efforts, 77 percent of respondents note mobile banking has helped improve how well they manage their finances.

As one qualitative respondent acknowledges, “I just created a monthly budget, so I will be focusing on that in the next six months as a way to avoid overspending. Hopefully, I will be able to start putting away some money in savings again.”

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