World's wealthy put retirement on hold

Oct 10, 2010

Most high-net-worth individuals plan to work past traditional retirement age, with their home nation’s macroeconomic prospects identified as a key motivator, finds a Barclays Wealth survey.

The world’s wealthy are eschewing traditional retirement in favour of continuing to work, while their confidence in having enough money to retire on appears tied to the macroeconomic environment in which they operate, new research finds.

Globally, 60% of respondents to a Barclays Wealth survey of over 2,000 high-net-worth individuals (HNWIs) said they planned to continue working after retirement. The bank has dubbed this modern breed “nevertirees”.

The Middle Eastern nations of Saudi Arabia (92%), UAE (90.6%) and Qatar (88.7%) lead the way, against an average of 73.5% for Asian countries. In contrast, Japan recorded one of the lowest totals at 46%, ahead only of Switzerland (34.3%) and Spain (43.9%).

Significantly, just 49% of HNWIs in Japan felt confident that they had enough money to retire on, compared with an Asia-Pacific average of 73.5% and a global mean of 74.5%.

“Economies in the Asia-Pacific region as a whole are expected to keep growing with fairly strong market returns,” notes Manpreet Gill, Asia strategist for Barclays Wealth. “But in Japan, there are not many expectations of long-term structural growth that is out of the ordinary, and this is a difference that comes out very strongly [in the survey findings].

“It comes down to how much income you expect to earn [on your savings]. In India, 79.2% of HNWIs said they felt confident in having enough to retire on, and this is a country where you can get 7-8% returns on government bonds. Whereas in Japan, you won’t even get 1% [on government bonds].”

Japanese respondents also stood out in other segments of the survey. They were the least confident that their children would have a proper understanding of money at 46%, against a global average of 67% and 65% for Asia-Pacific. Hong Kongers were the most optimistic in this regard at 75%.

Japanese were also least confident that their children would become wealthier than them (25%), against a global average of 45% and 53% for Asia-Pacific as a whole. Indians were the most bullish at 73%.

Unsurprisingly given the above, just 3% of Japanese respondents said they expected their children or family to support them in old age, against a global average of 11.3% and 12.6% for Asia-Pacific. Hong Kongers were a clear stand-out in this category, at 40.2%.

The survey also threw up differences in attitudes among the wealthy towards succession, inheritance and estate planning. Respondents in the UAE (98%), Saudi Arabia (95%) and South Africa (80%) said they felt financially responsible for their children, whereas individuals in Switzerland (38%), Japan (41%) and the US (44%) evidently don’t feel the same way.

Gill stressed that the ‘nevertiree’ factor raises the risk that HNWIs will increasingly leave difficult decisions about what to bequeath to the next generation unresolved.

“People are clearly not really thinking about retirement in a traditional sense, but from an advice point of view, they need to think about succession planning,” he advocates.

“If you don’t actively plan to retire, there is a danger that you put off thinking about planning for succession until it’s too late. This is one of the main take-aways from the survey for [Barclays Wealth] in terms of what advice we should be giving.”

More than 2,000 wealthy individuals participated in the global survey, carried out by Ledbury Research, including more than 500 from Asia-Pacific. Curiously, mainland Chinese HNWIs did not feature.