Entrepreneurs savvy when it comes to retirement plans

In general, the word retirement is synonymously used with old age. When discussed about retirement, most individuals talk about relaxing, idling and spending most of their time with their loved ones at their desired locations leading a sedentary life. Also, most associate with non-productive life, especially in terms of earnings, energy and enthusiasm. But, the notion of retirement and its related issues are changing faster. This is to do with the changing attitudes due to the increasing longevity, making the idea of old age to be shifted upwards.
No longer the individuals are constrained by the traditional conceptions of retired life but many are seeing retirement as a new lease of life with lesser or no strings attached. Many more are beginning to envisage post-retirement life similar to that of their early earning years. This is especially true in the advanced economies of the US, the UK, Singapore, Hong Kong and Germany as more and more want to travel and rediscover the world around them, as per a survey conducted by UBS.
The increased longevities of the populations have also made to revisit the way retirement is being planned. This is because the conventional way of approaching the retirement as a single pie has to now give way for a more dynamic phased approach. The current age groups though have broader variations, preferences and opinions towards the retirement, the most common philosophy remained about the acceptance of longer life than earlier planned or thought about.
According to the UBS survey, entrepreneurs are savvy when it comes to retirement and seems to have realistic perspective on what retirement entails when compared to their peers. Their aspirations towards the time spent in travel, career and health-related issues reflect similar and nearer to what actually is happening with the lives of those already retired. In comparison, others over-estimate the lifestyle like time spent on travel, work etc.
The survey also finds variation among the generations. For example,millennials aka Generation Y ie the generation broadly defined as of those born between 80s and ’00 recognise that retirement is far off and they can’t accurately predict the economic circumstances that may find themselves in at that point of their lives. As a result, they aspire to save more than Gen X to account for this uncertainty. Moreover, this generation have their lives quiet unpredictable compared to Gen X in their income earnings and the lifestyle choices which is reflecting in their retirement ideas.
Despite this understanding, across the age groups of Gen X and Y, the critical aspect of planning for retirement is not pursued through professional help. Most of them don’t seek professional help until later in life, either they believe they don’t need advice or don’t yet see the value in paying for that advice. Instead, the survey reveals that most of these investors leverage most of their social networks when planning for retirement. They value the advice from their spouses and friends as the source of priority, while seeking for help on retirement. Parents and financial planners also figure in the opinion sources but are seen as secondary in importance.
Another interesting finding from this survey is that about 48 per cent of the women start a business to help support them in retirement, while men do this to leave a legacy. Women relate a direct relationship of starting a business to their retirement savings, while men consider funding their retirement through other sources than their business. But, as they age, both the genders share a commonality of decreasing interest in pursuing for higher returns while prefer to leave a legacy out of their businesses.
The requirement of professional help from a financial planner also varies with the quantum of investment. About 67 per cent of the investors with investible assets under $1 million use the planner to advice on how much to set aside for retirement. But as the assets grow, these needs change and about 53 per cent of the investors with investible assets over $1 million seek out the advice of a financial planner to identify the best investment strategies.
The above survey is a sample of the broader mindset towards retirement and it’s planning. It only means the critical importance of professional advice in retirement planning. It could enhance in leveraging the overall asset mix for a better retired life of an individual.

K Naresh Kumar
(The author is Head (Research and Planning) with Wealocity and could be reached at [email protected])