Traditional retirement is being rejected by a new breed of wealthy worker, who want to carry on working for as long as they are able, says Absa Wealth, an affiliate of Barclays Wealth, in the latest Wealth Insights report, The Age Illusion: How the Wealthy are Redefining Their Retirement.
The report which looked at the perceptions and attitudes of 2000 high net worth individuals around the globe, found wealthy South Africans were the world’s most confident about their financial security in the 20-country survey. And South Africa’s wealthy topped the rankings by far as the nation most optimistic about retirement.
Says Nomkihta Nqweni, Managing Executive from Absa Wealth: “Interestingly, high net worth South Africans have a very positive outlook on retirement considering it to be the best years of their lives.”
The survey showed that half of wealthy South Africans expect retirement to be the ‘best years of their lives.’ South Africa was followed by Australia and the USA in retirement with 25% respondents in each of those countries agreeing.
In contrast only 2% of Saudi Arabians, 5% of Latin Americans and 8% of the Swiss believe retirement will be the best years of their lives.
The report also highlighted stark sociological shifts in attitudes towards retirement – long perceived as the time in your life when you kick back and forget about work. Sixty per cent of wealthy individuals polled say that they plan to become a ‘Nevertiree,’ shunning traditional retirement. Instead they expect to continue working, start businesses and take on new projects in their later years.
South Africans (89%) were also among the highest group of respondents who expressed a desire to keep on working in later life, after other emerging markets such as Saudi Arabia (92%) and the United Arab Emirates (91%).
However the concept is also popular in developed economies with the UK (60%) and US (54%) showing a desire to carry on working. High net worth people in Switzerland (34%), Spain (44%) and Japan (46%) are the most likely to want a conventional retirement.
“The findings show that the concept of Nevertirement is expected to grow over the coming decades, with over 70% of respondents under the age of 45 saying that they will always be involved in some form of work,” Nqweni added.
This represents a step change for the wealthy. While previous generations looked to create their wealth early on in life with a view to enjoying it when they retired, this report reflects a different attitude, with people wanting to continue to challenge themselves well beyond the traditional retirement age.
Many Nevertirees prefer to be actively engaged and challenged and are not bound by their age with regards to continuing their working life.
When respondents were asked about their financial status, South Africans were the most confident in the world about their financial security with 65% of respondents certain that they are financially secure. This was ahead of other confidently wealthy in Spain (63%) and India (55%).
Succession, Inheritance, Estate
The report identifies significant disparities in attitudes amongst older wealthy individuals in relation to succession, inheritance and estate planning. Those wealthy respondents living in developing economies feel a greater sense of responsibility for, and plan to give considerably more to, the next generation.
Economies such as United Arab Emirates (98%), Saudi Arabia (95%) and South Africa (80%) say that they are financially responsible for their children. However, on the other side of the spectrum, wealthy individuals in developed economies do not feel that they are financially responsible for the next generation, with Switzerland (38%), Japan (41%) and the US (44%) at the bottom of the list.
“These contrasts are particularly interesting when compared with their views about the prospective level of wealth held by their children,” said Nqweni.
Just 35% of respondents in the UK, 28% in Spain and 26% in Switzerland feel the next generation of their family will be wealthier than them, compared with Saudi Arabia (80%) and India (73%), who show far more optimism about the prospects for their children’s wealth. Yet as the report shows, respondents from developed countries do not seem to be planning to counter this by passing on a significant portion of their wealth to their children, whilst those in developing countries are potentially giving their children a 'head start'.
Caution is raised by the survey noting that the Nevertiree might pose issues relating to succession planning. While retirement was traditionally a time when individuals would make plans for their family’s wealth, Nevertirees are working well beyond the traditional retirement age and are in danger of leaving difficult decisions unresolved.
“Even though many people may remain at work well into their later years, they should not shy away from succession planning. In many cases a longer working life places even greater importance and urgency on the need for succession planning decisions to be made much sooner,” noted Nqweni.
New Attitude, New Career, New Role
Furthermore, the report demonstrates that as well as wanting to keep on working, the wealthy are using the later years to re-examine their options with regards to work, looking for different careers and positions, often moving from the role of execution and control to that of influence.
Sarah Harper, Professor of Gerontology and Director of the Oxford Institute of Ageing at the University of Oxford says, “People want to contribute, they want to be doing something. Work gives people status, and at an age when you’re incredibly experienced you may want to start a second career or even do something completely different from your previous professional life.”
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About Absa Wealth
Absa Wealth, a division of Absa Bank Ltd and an affiliate of Barclays Wealth, serves ultra high net worth and family office clients in South Africa providing holistic international wealth solutions using best of breed products, wealth management, investment management, risk management and structured lending. With the backing of Absa Capital, Absa Group and Barclays Wealth, Absa Wealth offers clients a sophisticated, integrated wealth management proposition, centered on the individual, leveraging the depth and breadth of its global and local expertise.
About Barclays Wealth
Barclays Wealth is a leading global wealth manager, and the UK’s largest, with total client assets of £153.5bn, as at 30 June 2010. With offices in over 20 countries, Barclays Wealth focuses on private and intermediary clients worldwide, providing international and private banking, investment management, fiduciary services and brokerage. Barclays is a major global financial services provider engaged in retail banking, credit cards, corporate banking, investment banking, wealth management and investment management services, with an extensive international presence in Europe, the Americas, Africa and Asia. With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs approximately 147,000 people. Barclays moves, lends, invests and protects money for over 48 million customers and clients worldwide. For further information about Barclays Wealth, please visit our website www.barclayswealthinsights.com.
About this report
Researched by Ledbury Research and written in conjunction with Barclays Wealth, this 12th volume of Barclays Wealth Insights looks at the changing attitudes towards retirement and succession planning amongst the global high net worth community. It is based on two main strands of research. Firstly, Ledbury Research conducted a survey of more than 2,000 high net worth individuals, all of whom had over £1m (or equivalent) in investable assets and 200 with more than £10m. Respondents were drawn from 20 countries around the world, across Europe, North America, South America, Middle East and Asia Pacific. The interviews took place during the first half of 2010. Secondly, Ledbury Research conducted a series of interviews with academics, entrepreneurs and other experts from around the world. Our thanks are due to the interviewees for their time and insight.
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