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Even the affluent now doubt they have saved enough
Pittsburgh Post-Gazette


March 17, 2009

The poor and middle class aren't the only ones sweating bullets over their ability to retire when their working days are done. Even the wealthy are worried about their financial future, according to a recent study.

A survey released by PNC Wealth Management of people with at least $500,000 in investable assets dashes many stereotypes about the wealthy and illuminates how times of unprecedented economic hardship have caused even the affluent to doubt they will have enough stashed away.

The analysis of 1,263 wealthy Americans showed 34 percent reporting they are behind schedule, do not believe they will meet their goal or have no retirement goal at all. Fifteen percent had assets of more than $5 million.

"Retirement is a universal thing," said Tom Crowley, a vice president at PNC Wealth Management. "The wealthy and not so wealthy have the same concerns. But wealthy people also have a higher standard of living."

Poll after poll shows that not having enough money for retirement is at the top of most people's economic concerns, especially as layoffs mount and employers are reluctant to hire until the economy turns around.

But even those with steady paychecks and no fear of losing their jobs have seen net worth decline and retirement savings evaporate. Wealthier people could arguably worry more because their losses are greater.

"If you're down 50 percent when a million is involved, it's far more devastating than if you're starting with $10,000," said Ted Bovard, a principal with Fort Pitt Capital Group.

"I have folks who have $12,000 and if their account is down to $9,000, they are not happy. If they have $1.2 million and they're down to $900,000, they are more unhappy.

"The percentage loss is exactly the same but there are more zeros involved."

Crowley pointed out the survey was conducted for PNC by Harris Interactive in September and October 2008, which might suggest the number of wealthy feeling unsure about retirement could be even higher today.

But when it comes to retirement, if the wealthy take a hit in the market, it's not so much about losing money as losing choices.

About one third of wealthy Americans in the PNC survey reported retirement for them means having flexibility to be able to do whatever they want when they want. Their average retirement date is age 62.

"People with that kind of money are living lifestyles they are comfortable with," said Daniel White, president of Daniel A. White Associates in Glenn Mills, Delaware County. "They are taking cruises, traveling and helping fund their grandchildren's education.

"They are scared, too. But it's a different kind of mindset. It's not about survival. I see people come in who are down a half million dollars and they are still OK. It doesn't mean they are happy. But they are not wondering if there's going to be food in the refrigerator."

Lyn Dippel, a vice president and senior adviser at Financial Advantage Inc. in Columbia, Md., said a doctor client with more than $2 million who planned to retire this year has indefinitely postponed retirement.

Also, a retired engineer with close to $2 million decided to return to his former employer for a two-year contract to improve his cash flow so he doesn't need to take withdrawals during this time. Other clients, she said, are reducing monthly withdrawals and putting off car purchases and travel plans.

"Most of our clients don't consider themselves wealthy, although they have $1 (million) to $2 million," Dippel said. "They really look at a worse case scenario, such as not making any return on their investments and health care costs skyrocketing."

Bill Roiter is a clinical psychologist whose research and work over the past 25 years has focused on the psychology of retirement.

His book, "Beyond Work: How Accomplished People Retire Successfully," was based on interviews with successful people either near or in retirement.

"It seems it would make sense that more money equates to more happiness, but that doesn't hold up," Roiter said. "What being rich does for people is increase their security to live the way they want, so it does open options for people. The fear is they will lose their security and therefore their options and it's very frightening."

From many people's perspective, anyone with at least $500,000 to invest should have enough money to feel safe and secure without a job.

"The average person would say they have nothing to be worried about. But they do worry and they have legitimate concerns," said Mike Freker, a retirement planner at AXA Advisors, Downtown.

"Their declining portfolios represent a loss of control. For people who have assets and worked hard to accumulate them, they feel something has been taken away."


E-mail Tim Grant at tgrant(at)
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