High net worth retirees are not who you think they are. The business owners and high net worth individuals who most enjoy and thrive in retirement are living differently than most of us imagine. Let me give you three surprising facts about today’s retirees, especially those with high net worth.
#1: Retiring? Really?
Maybe the most intriguing insight about high net worth retirees is that so many of them are not actually retiring. A 2013 Merrill Lynch national study found that they’re moving into their later years to “explore new options, pursue old dreams, and live life to the fullest.” The consensus of the people polled (including 3,005 affluent respondents with $250,000 to $3 million in investable assets) is that they see longevity as a bonus—a chance to devote energy to pursuits they didn’t have the time or freedom to chase earlier in life. So they’re less likely to be in the rocking chair and more likely to be chairing a committee or leading a cause they believe in.
Other research shows that high net worth individuals want to work at least part-time during retirement. They may view retirement as a time to reinvent their career or launch a whole new career. This pursuit of work isn’t about money. It’s about the stimulation and satisfaction that comes from work.
These high net worth individuals don’t view retirement success in terms of dollars. They see a successful retirement as one where they have time for new experiences, get to help their family, and make a difference in the world. That’s very different than the picture of someone who wants to be on the golf course all day every day, plans to sit alone at home working on a hobby, or devote all their time to managing their finances.
#2 Putting Family First
Related to that first insight is a second insight about family interdependencies. The great recession and today’s questionable economy has many business owners and high net worth individuals worried about their families. Many families have one or more members who struggle financially. Part of the retirement picture for many high net worth individuals today is balancing their own financial needs with helping out less fortunate family members. An annual U. S. Trust study on the wealthy finds there’s a growing trend of high net worth individuals providing substantial financial resources to children, grandchildren, siblings, parents, and other members of the family.
Grandparents may pay for part of their grandchildren’s education. Parents may house their millennial children or help buy and pay for their adult children’s first condominium or home. One Connecticut friend I know retired and moved to Florida to help his son launch a financial services business.
Both pre-retirees and retirees are increasingly using their own retirement savings to give housing, healthcare, and educational support to family members in need. But the overwhelming majority of high net worth individuals who do this have not accounted for the financial impact of taking care of other family members in their retirement or long-term financial planning.
#3 Finding the Secret to Living
This final insight applies to high net worth individuals, many types of retirees, and wealthy people age 50+ who have no retirement plans. Entrepreneurial businessman Tony Robbins may express this insight best. Robbins is a founder or partner is more than a dozen companies. With a net worth of some $480 million and a bevy of high net worth clients he knows a little about wealth. In his book, Money: Master The Game, 7 Simple Steps to Financial Freedom, Robbins says the secret to living is giving. From what I see, I believe what’s true for Robbins is true for many, many high net worth individuals.
When we share with others we receive a greater quality of life. We also receive greater joy. Giving back is a key to staying healthy, living well, and enjoying life.
This relates to you if you’re a high net worth individual because you’re among the people most able to give back financially. Now you may think that it’s easy for someone like Robbins (with $480 million) to promote giving away money but he started giving money away when he a 17-year-old janitor. For Thanksgiving that year Robbins fed two families. He calls it one of the most moving experiences of his life. His foundation now feeds two million people every year in 36 countries through International Basket Brigades.
Lots of people and research support what Robbins is talking about. In his book Robbins interviews “money masters” – extremely wealthy people who’ve learned how to make and grow billions. He claims every one of them generously gives back. They share their time, money, and talent willingly and often with others because they believe the true meaning in life comes from giving.
For example, Paul Tudor Jones, one of the most successful stock traders of all time (net worth: $4.3 billion), does an amazing amount of philanthropic work. Asked why he gives away so much, Tudor Jones talks about a kindness he received when he was four years old. “We forget how important the smallest action can be. For me, I think, it kind of spawned a lifetime of trying to always repay that kindness.”
Gene Thomas Offredi, CFP®, RFC™ is the founder of Guilford, Connecticut’s Summit Investor Coach, LLC. Contact Gene on the web or by phone at 203.453.1017. Summit Investor Coach, LLC is a Registered Investment Advisor.