Advisers Can Assist High-Net-Worth Investors With Reimagined Retirement

Across generations, investors with $5 million of investable assets have created a new retirement roadmap.

High-net-worth investors are redefining retirement, according to new data from Northern Trust Wealth Management. 

Northern Trust’s 2022 Wealth Planning Outlook Survey asked 250 respondents across generations—Millennials, Gen X, Baby Boomers and the Silent Generation—with at least $5 million of investable assets about their views on retirement. Pam Lucina, chief fiduciary officer and head of the trust and advisory practice at Northern Trust Wealth Management, is the report’s lead author. 

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The survey found that Millennial respondents report aspiring to retire earlier than other generations—between ages 35 and 44.

Across age groups, HNW investors plan to stay active in retirement by working, attending school and starting businesses.

Northern Trust surveyed non-retired full-time workers (68%), retirees (22%) and part-time workers (7%). The average respondent’s age was 51 years old. Overall, the respondents were 36% Gen X, 29% Millennials, 19% Silent Generation, 13% Baby Boomers, and 3% Gen Z; 69% of the respondents were male and 30% female.

Nearly half (48%) of investors of the investors had investable assets between $5 million and $10 million, while 28% had $10 million to $25 million, 15% had $25 million to $50 million and 9% had over $50 million. 

Digital Assets and ESG Investing

Half of the investors surveyed own cryptocurrency, with younger generations and the non-retired cohort significantly more likely to own digital assets than the retirees, the report found. Respondents with higher asset levels are also more likely to own cryptocurrency.

“Gen X and those not retired are the two groups that are more probable to purchase cryptocurrency in the next year,” the report states.

Respondents were also asked about their views on environmental, social and governance investing, and how important it is that investments factor in sustainability criteria.

Overall, 25% of investors have less than 10% of their investments in ESG funds. Additionally, 53% plan for their ESG investment exposure to remain the same, a position most prevalent among the Silent Generation and Baby Boomers.

Non-Retired Investors

The survey found that 58% of respondents will remain in the workforce instead of retiring when they stop their current work, and plan to work in consulting in their current profession or in a similar one. Among Millennials, 69% reported that they are planning to do so.

Outside of consulting, 43% of investors surveyed said they plan to invest in one or more businesses, 25% plan to start their own, and 20% plan to pivot to another professional area, Northern Trust found.

For Gen X respondents, the plans for retirement and career changes were different. Respondents expected to invest in at least one business. For the non-retired cohort, across ages, 32% plan to enter semi-retirement after age 55, while 28% plan to semi-retire at age 65 or older.

“[O]ne quarter [of those surveyed] plan to retire earlier,” between ages 35 and 54, the report states. “A small proportion report they have no plans or have not thought that far ahead.”

Retired Investors

The survey found that among retired respondents, most were able to contribute and invest for retirement and retire comfortably at the age of their choosing: two out of three respondents retired when planned, with an average retirement age of 58.

Concerning retired respondents’ activities since retiring, the survey found that 62% say they have had a leisurely retirement, 44% have volunteered, 16% have worked in consulting or in a similar profession, 13% have invested in one or more businesses, and 5% have started a business.

The survey also revealed that 76% of respondents would sell existing assets to secure an additional source of income if needed, 16% would take a personal loan, and 15% would rely on family and friends.