Singapore, 12 April 2016 – High net worth individuals no longer equate retirement with old age. Instead, they view retirement as a chance to begin new ventures, the most popular of which include entrepreneurship, lifelong passions or travel, according to UBS Wealth Management’s Investor Watch report “Why should I retire? Retirement is not the same as old age” released today.
Respondents in the US, the UK, Germany, Singapore and Hong Kong now regard retirement as a new lease on life. As life spans increase, retirement is no longer perceived as a single period but has evolved into three distinct phases: Transition (50–60), My Time (60–80) and Golden Years (80–90+). 55% of women and 64% of men say they feel old before reaching the age of 70. This differs in part from the situation in Hong Kong, where 51% of women, but only 35% of men, say they feel old before retirement.
While many imminent retirees expect retirement to bring new opportunities, few are financially prepared for a retirement that is likely to last significantly longer than that of their parents. Many investors have failed to provision for lifestyle preservation through asset accumulation, wealth preservation, legacy and estate planning, and succession planning.
August Hatecke, Head of UBS Wealth Management Southeast Asia, said: “Many of our clients are first-or second-generation entrepreneurs who are at a stage of life where they need us to help them with wealth preservation and wealth planning. In many cases, they neglect to plan ahead for their retirement, as well as for leaving a family legacy and inheritance. However, increasingly they are coming to terms with the need to implement plans early to ensure financial security. UBS is well positioned to meet their needs on lifestyle preservation through our dedicated wealth planning team.”
Retirement savings for these investors are often lumped into one pot. The common strategy of allocating more than half of retirement savings to stocks may leave investors unprepared as their needs change during the three phases of retirement.
“Our client promise is to protect and grow the wealth of our clients over generations. It starts with understanding our clients’ individual needs to provide them with personalized and comprehensive solutions, so that they and their families can have peace of mind", Hatecke added.
Entrepreneurs
One key finding of the survey highlights a different mind-set among entrepreneurs. This is interesting for Asia – and especially Singapore – as many of the wealthiest families and individuals are first- and second-generation business owners.
In Singapore, age is not a barrier to starting a business, as some of our survey respondents have set up new businesses upon retirement. Women start their own businesses for financial stability, while men do it for legacy. Women see starting a business as having a direct relationship with their retirement savings. 48% of women start a business to increase their yearly returns and are confident that the proceeds will support them in retirement.
For entrepreneurs, retirement is often viewed with optimism. Entrepreneurs are savvy when it comes to retirement and have a more realistic perspective on what retirement entails when compared with their peers. 24% of entrepreneurs plan to focus on their career in retirement, while only 20% anticipate focusing on health issues.
Millennials vs. Gen X
Generational views on the complexity of retirement vary. Millennials recognize that retirement is far off and that they cannot accurately predict the economic circumstances they might find themselves in at a particular point of their lives. As a result, they aspire to save more than Gen Xers to account for this uncertainty.
Other key findings
More than half of Singapore investors rely on spouses and friends for financial advice, despite rising market complexity. When asked “Who do you go to for advice on your retirement plans?” 47% turned to their spouse and 33% relied on friends.
67% of individuals that have investible assets under USD 1 million and use a financial planner look for advice on how much to set aside for retirement. As investors’ investible assets grow, their needs change. 53% of investors with investible assets over USD 1 million seek out the advice of financial planners to identify the best investment strategies.
Methodology
Investor Watch is a quarterly publication analyzing investor sentiment and behavior, designed to provide a window into investors’ current, core, and often shifting priorities. Created in 2012, UBS Investor Watch tracks, analyzes and reports the sentiment of affluent and high net worth investors. The 2016 survey is the first to be conducted globally.
UBS Investor Watch surveys cover a variety of topics, including overall financial sentiment, economic outlook and concerns, personal goals and concerns, and key topics such as aging and retirement.
For this first international edition of UBS Investor Watch, 226 affluent, high net worth and ultra high net worth investors responded to our survey between 4 January and 14 February 2016. The 226 investors forming the core sample have at least USD 250,000 in investible assets and include 95 with at least USD 1 million.
This UBS Investor Watch also includes a sample for younger generations: 103 millennials aged 18–35 and 67 Gen X respondents aged 36–55.
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