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‘Mass Affluent’ Worried About Retirement

Fear of running out of money during retirement is common, but it’s mitigated by interest in saving — the importance of which is not lost on younger employees, according to a new BoA Merrill Lynch report. The Spring 2014 Merrill Edge Report is based on a semi-annual study that looks at the concerns of the “mass affluent” — those with household incomes between $50,000 and $250,000.
Concern over the adequacy of retirement funds heightens with age, the report shows. Overall, 55 percent of the mass affluent showed this fear; 61 percent of Baby Boomers (ages 51-64) and the Gen Xers (ages 35-50) did so, but only 41 percent of Millennials (ages 18-34) did. 
Despite younger workers’ lower concern over the adequacy of their retirement funds, they are planning ahead. More than half of the mass affluent Millennials — 54 percent — started saving for their retirement between the ages of 18 and 24, and 80 percent of them have retirement savings. And more Millennials and Gen Xers began saving for retirement when they started their first jobs than was the case for their older counterparts.
For those with retirement savings, almost half — 48 percent — were prompted to do so because their employers offered a 401(k) plan. Marriage and the arrival of a first child also were incentives to save, but were not as strong a motivator as the availability of a 401(k). 
But concern about financial security in retirement is not strong enough to force radical changes, the report indicates. For example, one-third of the mass affluent are not willing to reduce what they spend on entertainment to save for retirement; for Millennials, 34 percent are not wiling to cut what they spend on technology, and 26 percent won’t spend less on coffee.