Millionaires trust equities to fund retirement as more expect to hit 100

More of the UK's millionaires than ever before now believe they will live to 100, according to a new study, which is causing them to fret over how they will fund their long retirement.

A third of British people with more than $1m (£705,000) of investable assets now think they will hit centenarian age, UBS's latest Investor Watch survey showed, rising to 40 per cent of women.

But the increasing longevity is producing financial concerns, as 47 per cent are worried about how they will pay for healthcare and 41 per cent are concerned they will have to lower their living standards to preserve their wealth.

Read more: High net worth individuals are happy about their wealth now, but worried what will happen in retirement, new research shows

"From a financial point of view, living to 100 throws up three main challenges," said UBS Wealth Management's Nick Tucker.

"The first is the pure difficulty of planning a 30- or even 40-year retirement. The second is the change in investment mindset and approach. People are now likely to live through entire investment cycles in their retirement, while needing to access wealth at different times in that period.

"The final challenge is on the question of legacy and inheritance. By the time you pass away, your children are likely to be in their 40s, 50s or 60s. Wealth might not be as useful at this point as when they were younger."

Read more: Ultra high net worth families are moving towards riskier asset classes as investment performance bounced back last year

The last point comes as UBS found more high-net-worth individuals, at 40 per cent, are planning to pass money on to their grandchildren rather than their children.

In order to help fund retirement, 40 per cent of these investors are now "committed" to making long-term investment decisions.

Equities generally are favoured most, but wealthy investors are also relying on bonds and real estate to help keep their wealth up.

"If I was going to live to 100 Id change my asset allocation, take more risks and buy more venture capital trusts," said one 75-year-old man surveyed in the UK.

Read more: Lloyds' private bank boots bonds as it funnels wealthy's cash into hedge fund-type investments

[contf] [contfnew]

CityAM

[contfnewc] [contfnewc]