Nine out of ten millionaires are worried that rapidly rising health care costs will significantly affect their ability to enjoy retirement, many plan to fund their retirement by working part or full-time, and nearly half are relying on themselves rather than a professional in planning for retirement. This is according to research released today by The Northern Trust Company, a leading provider of investment management, global custody, fiduciary and private banking services for affluent individuals, families and family offices. This survey comes at an interesting times since low-income and middle-class income Americans are equally worried about their retirement income after Bush's proposal to reduce their retirement benefits has been disclosed. (Related article: Retirement benefits to go down under Bush privatization plan)
Northern Trust's new survey of 1,312 millionaire investors, representing more than $7 billion of total investable assets, revealed that 92 percent of non-retirees are very worried or somewhat worried that rapidly rising health care costs will affect their ability to enjoy retirement. Most (88 percent) retired millionaires, 55 and older, are similarly worried, as are nearly all (96 percent) baby boomer millionaires (age 54 and under). (Related article: Social Security privatization to hurt baby boomers)
This is happening primarily because Americans are living longer, the stock market has not been doing very well since the collapse of the tech bubble, and President Bush continues to oppose import of prescription drugs from Canada.
"It was surprising to learn that regardless of age or level of wealth no one is immune from the devastating affects of spiraling health care costs," said Thomas Hines, Senior Vice President and head of the Northern Trust Financial Planning Group. "Affluent individuals and families are feeling the pinch along with everyone else, as rising costs are expected to take a huge bite out of retirement savings. Preparing a financial plan can help them anticipate the cost of paying for long-term care insurance, if appropriate, home health care or nursing home care should they need it. Perhaps that's why many plan to continue working during retirement."
Close to half (42 percent) of surveyed millionaires who have yet to retire said they plan to work part or full-time during their retirement years. Of those, 38 percent of baby boomers plan to work. Further, nine percent of retired millionaires reported they are currently working, while 10 percent of millionaires with more than $10 million of assets to invest said they will never retire, indicating that for a number of affluent individuals work becomes their identity and lives.
"The intention to work during retirement is a phenomenon we haven't seen with previous generations," Hines said. "The baby boom generation is unique in that they are interested in staying active and engaged well into their senior years. The idea of working in retirement could be a reflection of that interest. For those with higher incomes the reason to continue working may be more a function of personal identity than need."
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