If financial misery loves company, you’ve got a surprising amount of it among wealthy folks–the people who you’d think would feel comfortably insulated from the current economic crisis.
That’s a key takeaway from a survey just released by the Phoenix Companies, a financial services firm which conducts an annual poll of well-off Americans–those whose net worth, excluding the value of their primary home, amounts to at least $1 million.
In the survey, conducted by Harris Interactive, participants were probed about one of those primal fears that affect anyone thinking about retirement–the possibility that your money won’t last as long as you do. Specifically, they were asked whether they agreed with the statement, “I am very concerned about outliving my money in retirement.”
The response was surprising. Forty-five percent of these millionaires said yes: They either “agreed” or “agreed strongly” with that idea.
Okay, maybe you’re thinking that’s not so surprising. Say, for example, you’re a 55-year-old with $1 million, you have a mortgage, you have three kids to send to college, and you’re wondering whether you’ll be laid off next week. In that case, One…Million…Dollars may seem laughably inadequate, just as it was in the first Austin Powers movie.
But you can’t explain away all the numbers that easily. Thirty-five percent of respondents worth $5 million or more were concerned about outliving their money. Think about it: One-third of the people worth at least five million bucks are just as worried retirement as you or I (assuming, of course, that you, like me, aren’t among the penta-millionaires). If you ever needed proof that, once you’re above poverty level, money doesn’t buy peace of mind–well, there it is.
Also surprising is the pessimism among younger millionaires: Sixty-one percent of the rich folk age 45 or younger fear outliving their money, compared to a mere 32% of millionaires age 65 or older–the very age group for whom running out of money in retirement is a real, immediate concern, not just a theoretical possibility somewhere off in the future. And, again, it’s not a question of money: Sixty-percent of younger millionaires worth more than $2 million are worriers, compared to 42% of older millionaires worth less than $2 million.
Why are the youngsters so glum? It’s likely a bunch of reasons, says Walt Zultowski, senior v.p. of research and concept development at Phoenix. Thanks to advances in medical technology, these younger millionaires will likely live to an advanced age, and thus have to pay for an extended retirement. They’re worried they’ll have to support elderly parents, too. They’re expecting Social Security benefits to be cut back. They’re worried about major economic downturns between now and their retirement. And they’re getting hit with a vivid, first-hand look at an older generation forced to scale back its retirement plans because of an economic meltdown.
So what’s more justified–youthful pessimism about retirement savings, or elderly optimism on the same subject? The answer, unfortunately, is unclear. “The younger folks’ concerns are legitimate,” says Zultowski. “On the other hand, maybe they underestimate their own earnings power and the power of wise investments over several decades.”