Retirement in 2010

Affluent individuals ”“ even those at their earning peaks ”“ are recognizing the need for lifestyle tradeoffs as pivotal to a happy twilight in the wake of the recession. They are also being told ”“ perhaps counterintuitively ”“ to stop and smell the roses.

With a moist finger to the financial breeze, the Bank of America released Merrill Lynch Affluent Insights Quarterly, a survey of the values, financial priorities and concerns of affluent Americans and the challenges and opportunities they face. Merrill Lynch Wealth Management? is based in Stamford.

The survey contacted a nationally representative sample of 1,000 Americans with investable assets in excess of $250,000.
According to Andy Sieg, head of retirement and philanthropic services at Bank of America Merrill Lynch, the survey revealed that many affluent Americans are rethinking their vision of retirement. It offers lessons learned from retirees and what they wished they had done differently when planning for retirement.

“The recession has caused Americans’ attitudes toward retirement to evolve at an unprecedented pace,” said Sieg. “For many, retirement is no longer a specific date at which an individual goes from working to not working. Today, the transition into retirement is tending to be more gradual and fluid. As such, an effective retirement strategy should go beyond an accumulation target and retirement income planning, and take into account what is truly important to an individual or couple, as well as the challenges they may face down the road.”

The survey posed the question: What if you had the chance to do it all again? Roughly half of retired respondents indicated that they would have focused more on their life goals and less on the numbers and on hitting a specific nest egg dollar amount.

Among all the retired respondents, three of 10 worked with a financial adviser when planning for retirement, though, in hindsight, more than half wished they had started doing so sooner.

“Helping our clients plan for retirement will continue to be a core focus for our business in the years ahead,” said Sallie Krawcheck, president of Bank of America Global Wealth & Investment Management.

Krawcheck said in the wake of the recession, 56 percent of respondents, whether retired or not, found some silver lining in how it affected, or may affect, their retirement planning and priorities.

Reflecting on 2009, respondents also indicated various lifestyle changes made during the last 12 months. As they looked to reduce or control spending, personal luxuries were down, while charitable giving remained strong. Energy costs represented another arena friendly to savings.

In the survey, retirees recommend building a plan around what is most important personally in retirement, having a plan to manage retirement income throughout retirement and paying down debt as the best advice for those within 10 to 15 years of retirement.