The need for comprehensive, long-term financial planning for both affluent individuals and the general population, highlighting the financial insecurity in America.
Financial Insecurity in America: Wealthy Individuals and the Urgency of Long-Term Planning
A recent survey conducted by Northwestern Mutual reveals that one-third of affluent individuals fear they may outlive their savings. Furthermore, nearly half admit their financial planning requires improvement which reflects the financial insecurity in America.
The Harris Poll conducted the survey online from February 13 to March 2 on behalf of Northwestern Mutual, involving 2,740 participants, with oversamples of Gen Z and high net worth individuals. The findings highlight the discipline of the wealthy compared to the general population. Forty-two percent of affluent Americans consider themselves “highly disciplined planners,” whereas only 20% of the general population share this sentiment. Moreover, 70% of wealthy Americans have financial advisers, almost double the national average. Eighty-four percent of affluent individuals have long-term financial plans that account for economic fluctuations, compared to just over half of the general population.
Catherine Valega from Green Bee Advisory emphasizes the value of professional guidance, likening financial planners to doctors for one’s finances. She stated, “Smart people take the time and value resources to help them plan and protect for their future.” Despite their financial discipline, the survey highlights wealthy Americans’ insecurity about retirement plans. They seek advisers who can offer more comprehensive guidance and a better understanding of their life stage and priorities. Economic uncertainty plays a significant role in this insecurity.
Financial Insecurity in America: Bridging the Gap in Comprehensive Planning
However, this study also uncovers issues within the financial services industry. Advisers often fail to assess their clients holistically, addressing only specific aspects of their financial lives.
As stated in the article of Yahoo Finance, wealthy families face unique challenges, such as market volatility and taxes, especially concerning IRAs. In contrast, lower-income families rely on salaries and Social Security, which are less susceptible to market forces.
Northwestern Mutual recommends that wealthy individuals seek a second opinion to strengthen their retirement plans. Javeri Gokhale, Chief Strategy Officer at Northwestern Mutual, encourages individuals to reevaluate their choices and advisers during periods of uncertainty.