What retirement looks like for Arizona’s affluent

Banking | 31 Mar, 2015 |

BMO Private Bank today released a study examining what retirement looks like or will look like for high-net worth Arizonans (defined as those with investable assets of $1 million or more). The study is part of BMO Private Bank’s Changing Face of Wealth series examining trends among affluent Americans.  

According to the study, a significant number of Arizona’s affluent plan to:

• Retire young: Almost one third (29 percent) plan to retire before the age of 60; the average age of retirement for Arizona’s wealthy is 62.

• Live in the United States: The vast majority (98 percent) want to stay in the U.S. during retirement, with 90 percent planning to use their time traveling, 73 percent spending time with family, 49 percent on hobbies and 49 percent volunteering.

• Continue working: Twenty-two percent plan to earn an income during retirement by working part time and 12 percent would like to start a new career.

“Your ability to live out your ideal retirement lifestyle will largely be determined by how well you’ve prepared for this period. To create the lifestyle you want, you need a comprehensive financial plan touching on investing, estate planning and philanthropy,” said Ashley Ober, Managing Director, BMO Private Bank, Arizona. ”Discuss your goals with a financial professional and your family early on so that the end goal is always in mind as you navigate day-to-day finances and plan for major purchases.”

Investing Profile of High-Net Worth Arizonans

The study also examined how affluent Arizonans manage their finances.  One hundred percent of respondents said they have an investment portfolio or share one with their spouse or partner. The average amount in their investment portfolios is $2.6 million, with 51 percent of the state’s wealthy holding more than $2 million. 

Further, the study found:

• Ninety-five percent of wealthy Arizonans plan to use money in their portfolio to fund their retirement, with 41 percent planning to use it as an inheritance for the next generation.

• Sixty-one percent consider themselves to be balanced investors, 27 percent are conservative and 12 percent are aggressive.

“A balanced approach to investing is the safest way to ensure a valuable portfolio come retirement. Having lived and worked through the recession, we’re seeing tomorrow’s retirees step back and re-evaluate the need for risk,” noted Jack Ablin, Chief Investment Officer, BMO Private Bank. “Affluent Americans want to retire younger and do more, so they aren’t willing to compromise their retirement income on risky investments.”

Key National Findings

On a national level, the study found:

• High-net worth Americans hold an average of $3.2 million in their portfolio and feel they need $2.3 million to live out their ideal retirement lifestyle.*

• One-in-five wealthy Americans plans to retire before the age of 40 and the average retirement age is 56.

• Ninety-six percent of affluent Americans plan to live in the U.S. during retirement, with 81 percent planning to spend their time traveling.

• Many want to continue to earn money through working part time (21 percent), starting a new career (21 percent) or starting a business (11 percent).

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