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February 21, 2014updated 04 Apr 2017 2:29pm

Affluent Arizonans say they need an average of US$2.3 million for retirement: BMO Private

High-net worth Arizonans reported that they require, on average, US$2.3 million to fund their retirement, according to a study by BMO Private Bank.

By Verdict Staff

High-net worth Arizonans reported that they require, on average, US$2.3 million to fund their retirement, according to a study by BMO Private Bank.

The study is the fourth in a series by BMO Private Bank examining trends among the affluent in the United States.

The study also found 90% of Arizona’s wealthy feel confident about their ability to achieve their ideal retirement lifestyle, compared to 94 percent nationally.

Jason Miller, CFP, director, Financial Planning (Western US), BMO Private Bank, said: "High-net worth Arizonans have become increasingly confident about their personal financial situation since the economy started rebounding a few years ago and their portfolios started delivering higher returns. This is being reflected in their optimistic outlook about retirement. Following the volatility from the recent past, we are also seeing more affluent families taking steps to educate their children further about managing their wealth and inheritances, which is also a very positive development."

Wealth and the Next Generation

The study also examined issues related to the inter-generational transfer of wealth and found that, among the affluent Arizona residents with children:

  • More than one-fifth (22%) of their wealth will be left to their children, 68 percent to a spouse or partner and 3.5% to charities.
  • For those with children under the age of 18, 12% spend "a lot of time" talking to their kids about money management.
  • Ninety-three percent feel their children are prepared to manage their inheritance.
  • Thirty-three percent feel their offspring will be better off than them.
  • Of the 42% who feel their kids will be worse off than them, 71% feel this will be because of future economic conditions.

Miller added: "There are many complexities with inter-generational finances, and every family situation is unique. The earlier a family is committed to educating the next generation, the better off they will be when the transfer of wealth occurs. Professional guidance is crucial."

Key National Findings

High-net worth Americans and Retirement:

  • Affluent Americans require, on average, US$2.3 million to fund their retirement.
  • Almost all (94%) are feeling confident about their ability to achieve their ideal retirement lifestyle.

Wealth and the Next Generation:

  • The vast majority (85%) of high-net worth Americans feel their children are well-prepared to handle their inheritance.
  • Affluent Americans will leave more than one-third (36%) of their wealth to their children.
  • Seventy percent spend time talking to their kids about money management and almost half (43%) feel that their offspring will be better off than them.
  • Of the 35% who feel that their kids will be worse off than them, 63 percent believe that this will largely be because of the future state of the economy.

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