NEW YORK (MainStreet) – Apparently, the term “millionaire” translates to “mere steps from dire poverty” for some living in the nation's upper economic echelons.
UBS recently surveyed 2,215 investors with more than $1 million in net worth and found that while those folks feel fortunate, they feel as if they have to keep amassing more wealth just to preserve their family's lifestyle. That makes them ambitious, but it also makes them feel as if they'll never have enough wealth to stop working and building onto that wealth. UBS found 77% of millionaires grew up middle class or below, with 61% aspiring to become millionaires and 65% feeling that $1 million was an important milestone. A full 74% of millionaires surveyed feel like they have “made it,” and the vast majority, 85%, attribute their success to hard work.
But 58% percent of millionaires report feeling increased expectations for their standard of living over the past 10 years. That's causing them no small amount of stress, as 52% feel like they are stuck on a treadmill, unable to get off without sacrificing their family's lifestyle.
“Some people feel incredibly rich when they've hit $2 million or $3 million and some people feel incredibly poor when they've hit $20 million,” says Cay Taylor, director specializing in trusts and estates at Citrin Cooperman. “It's their perspective and what it is they're trying to accomplish and, in today's estate tax regime, planning for the next generation when someone is married and has under $10 million is much different.”
It doesn't help when millionaires still fear they could lose it all with one wrong move. Roughly half of those with $1 million to $5 million are afraid one major setback, such as unemployment or a market crash, would have a significant impact on their lifestyle. Even a third of those with $5 million or more think it can all go away in a flash. That's especially true for millionaire parents working full-time, 63% of whom feel they can still be clobbered by one major setback.
“While it's natural to be uncomfortable at the thought of losing the wealth you have accumulated, the risk of major losses is not hard to mitigate,” says Paul Jacobs, certified financial planner and chief investment officer for Palisades Hudson Financial Group in Atlanta. ”People who lose all their wealth usually do so by either making bad investments or having runaway spending, or a combination of the two. While all investments have risk, the total level of risk in your portfolio can be managed by allocating a portion of your wealth into conservative investments, such as bonds or cash.”
It isn't that millionaires aren't satisfied with the lives they have. Roughly 73% of those with $1 million to $2 million reported being “highly satisfied” with their life compared with 78% of those with $2 million to $5 million and 85% of those with $5 million or more. While 37% of those with $1 million to $5 million say their wealth allows them to live a fairly luxurious lifestyle, 62% of those with $5 million or more are positive of it. Still, that doesn't take away their fears of market fluctuations, poor investment or human error.