High-net worth clients appear to be putting off retirement in order to maintain their current lifestyle once they exit the working world, according recent study of advisors.

The retirement income survey, conducted by MainStay Investments, the advisor distribution arm of New York Life Investments, found that investors are still shaken by the deep recession of 2008 and early 2009. More than half of the advisors surveyed said that a majority of their clients are delaying retirement. About 61% of these advisors indicated that their clients are not concerned with covering basic needs in retirement, but rather being forced to give up luxuries such as traveling and dining out.

Forty-six percent of the advisors cited loss of assets in late 2008 and early 2009 as the top reason clients are postponing retirement, while 40% listed healthcare costs as the next most important reason. Matt Leung, director and head of practice management programs at MainStay Investments, says that high-net worth baby boomers are often delaying retirement not just so they can afford luxury items, but also because they want to be properly prepared for the next stage of their lives, which could include philanthropic efforts.

“Boomers have been redefining how we go about doing things in our lives, so retirement should be no different,” Leung says. “I don’t think there is necessarily a negative perception about delaying retirement because they want to do new things once they retire. Being a productive member of society is very important to them.”

Almost all of the advisors (91%) surveyed indicated that they have made changes to their clients’ portfolios in the wake of the market downturn. More than half (61%) said they had too big of an exposure to equities. Guaranteed income products, such as annuities, were cited by more than 60% of advisors as being part of their new portfolio strategy to help clients meet retirement income needs. Leung believes that the economic crisis has allowed advisors to reassess their clients’ risk tolerance.

“The market downturn was unprecedented and no one expected the impact to be so severe,” he says. “Maybe they were taking a little more risk than was appropriate.”

More than 500 advisors were polled between December 8 and December 14, with 9% of the respondents being independent advisors.




Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access