Mass affluent Americans are planning to work longer than ever, according to Bank of America’s latest Merrill Edge Report, a semi-annual study that looks at the financial concerns of consumers with $50,000 to $250,000 in total household investable assets. The report found that more than half of that group (57%) plans to push back retirement, up from 42% in January 2011. One in five say they plan to retire much later.
“While the economy is showing signs of a turnaround, our data indicates the outlook among the mass affluent is not quite as positive,” Dean Athanasia, Bank of America’s Preferred and Small Business executive, said in statement.
In response, the mass affluent appear to be redoubling their efforts to get their finances back on track, according to the research findings. The report found that many more mass affluent Americans plan to focus on financial management tasks, such as budgeting, balancing short- and long-term financial needs, saving for retirement, and paying down debt, than in November, when the last report was released.
Almost seven in 10 mass affluent consumers (68%) said they plan to save for retirement over the next six months, up from 49% in November. More than eight in 10 (85%) said they plan to focus on budgeting, and 71% said they plan to focus on balancing short- and long-term finances, up from 67% and 55%, respectively, six months ago.
Balancing short- and long-term finances is proving difficult, however, as more than one in three (34%) admitted to tapping into their long-term savings or investments to meet short-term financing needs. In November, only 27% admitted to doing so.
The greatest financial concerns among the mass affluent revolve around long-term issues, including the rising cost of health care (89%), ensuring retirement assets last throughout their lifetime (83%), and being able to afford the lifestyle they want in retirement (80%), the data showed.
The study identified generational differences among mass affluent Americans. Gen Y consumers — those aged 18 – 34 — are much more worried about their financial future than older generations, but are less likely to take as many steps to get back on track, according to the findings. For example, this age group is the most likely to tap into their long-term savings to pay for short-term expenses. They are also less willing to make changes to meet their financial goals, such as cutting back on entertainment and personal luxuries.
Yet, they are much more apprehensive about their short- and long-term financial future than older groups. Almost eight in 10 Gen Yers (79%) expressed apprehension about caring for an aging parent or adult child compared to 49% overall. They are also most pessimistic about their anticipated retirement age, with 71% saying they expect to retire later than planned compared to 57% overall.
The survey was based on a nationally representative sample of 1,000 Americans in the United States with investable assets between $50,000 and $249,999. It also oversampled 300 mass affluent in San Francisco and Los Angeles. The survey was conducted between Feb. 13 and Feb. 29, 2012, by Ketchum Global Research and Analytics and Braun Research on behalf of Bank of America.