Yahoo Finance Even millionaires worry about having enough money for retirement
It turns out millionaires worry about retirement just like the rest of us.
A third of wealthy Americans think it’s possible they could outlive their savings, according to the new survey from Northwestern Mutual, while around half say their financial planning needs improvement.
The study, which spotlights the mindset of the wealthy as they navigate retirement planning, underscores how all Americans need to come up with a long-term financial plan, no matter how affluent they may be.
"You could have $20 million and spend all your money. You could be a school teacher and have a pension and be 100% set," said Chris Collins, wealth management adviser at Collins Financial, a Northwestern Mutual Private Client Group firm. "Whether you're low income, middle income, high net worth or not, you need to have a well thought out financial plan."
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Conducted online between Feb. 13 and March 2, the Harris Poll led the study on behalf of Northwestern Mutual and surveyed 2,740 individuals with oversamples of Gen Z and high net worth individuals with total household investable assets greater than $1 million.
The study demonstrates high levels of discipline among the wealthy compared to the general population. For instance, 42% of wealthy Americans considered themselves "highly disciplined planners who know their exact goals, have developed specific plans to meet them, and rarely deviate from those plans," while only 20% of the general population say the same, according to the study.
The study also finds that 70% of wealthy Americans have financial advisers, close to double the amount of the general population. Another 84% of wealthy people say they have a long-term financial plan that factors for up and down economic cycles. That’s compared to just over half of the general population.
"Wealthier people also have lives where they value experts' time and advice over trying to figure things out for themselves," said Catherine Valega from Green Bee Advisory. "While most would pay for a tooth Doctor (aka Dentist), not everyone feels the same way for paying for a money Doctor (aka, financial planner). But they should."
She added: "Smart people take the time and value resources to help them plan and protect for their future."
Still, despite their financial discipline, wealthy Americans also express insecurity about their retirement plans. According to the study, wealthy Americans said that if they were seeking a change, they would select one who could "offer more comprehensive financial guidance than their current adviser." Over 30% "would switch to someone who has a better understanding of their life stage and priorities."
The study attributes wealthy Americans' financial insecurity to economic uncertainty. But Valega says that the survey results reveal a larger problem in the financial services industry. In particular, she says advisers fail to assess their clients holistically.
"When I work with my clients, one of the first things that I do is get them set up in my financial planning software which gives them their own personal financial portal," Valega said. "And what I find is not a whole lot of advisers, planners, or financial advisers are doing that. So they sort of address one little piece, but not everything."
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Collins added that though fortunate, the wealthy face unique challenges. For instance, wealthy families have IRAs that are vulnerable to market forces and taxes.
"Lower-income families, they just don't have a lot of money in the market. They're used to living off of a salary. They're gonna get Social Security and that's that's really about it," Collins said. "Whereas the wealthy, they have to deal with market volatility. They have to worry about taxes coming out."
In a press release, Northwestern Mutual recommended that wealthy individuals seek out a second opinion to guarantee the best results in planning for retirement.
"It's wise for the wealthy to seek out a second opinion about the strength of their financial plans. Periods of uncertainty like the one we're in now are spurring people to take inventory about the choices they've made and reconsider if their advisors are the right fit for them," said Aditi Javeri Gokhale, chief strategy officer, president of retail investments and head of institutional investments at Northwestern Mutual.
Meanwhile, the experts assert that lower net worth individuals should find and consult a financial planner and come up with a plan to map out their retirement futures. Collins said that clients who plan ahead for retirement tend to feel more secure than those who don't.
"Just knowing that I'm going to be okay, knowing that I have a plan, knowing that there's somebody here that's helping with it, it gives me peace, it gives me calm," he said. "That's the benefit of working with a financial plan and you don't need to be ultra wealthy to do that."
Dylan Croll is a Yahoo Finance reporter.
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