The concern over having sufficient retirement funds is one of the great worries for affluent North American retirees. Millionaires, even multi-millionaires, have worries concerning retirement funds and how their finances will affect plans for the future.

Would it surprise you if I told you almost half of the population of affluent households (net assets of between $100,000 and $1 million excluding primary residence) and 33% of high-net-worth households (net assets of between $1 million and $30 million) have what we refer to as “The Downsizing Dilemma”?

Luxury home owners all have one thing in common – their home is a reflection of their success.

The Downsizing Dilemma is the fear that eventually you’re going to have to sell your home, the home that you adore, the home that represents who you are and how successful you are, and purchase something substantially smaller, in an area substantially less prestigious.

Spectrem Research Group looked at the following 3 segments of retired upper-tier clients:


  1. Millionaires – households with a net worth between $1 million and $5 million, not including primary residence.


  1. The Affluent – households with a net worth between $100,000 and $1 million, not including primary residence.


  1. Ultra-High-Net-Worth – households with a net worth between $5 million and $25 million not including primary residence.


The wealth segmentation study asked about retirement fund concerns. The answers were revealing, especially in view of the level of assets they currently owned.

“Retirement assets can come from a variety of sources, and Millionaire investors often have funds in investments that are dependent upon the economy,’’ said Spectrem president George Walper Jr. “Investors express concerns over the many aspects of life that can deplete funds, including healthcare costs and taxes, but some of them are also dependent on the return on investment they receive in future years.”

The investors were asked to place their concern over depleting retirement funds on a 0-to-100 scale, with “0” indicating “not at all worried” and “100” indicating “very worried”. Here are the results:

  1. Millionaires – 33.91% are worried about having to downsize
  2. Affluent – 47.60% are worried about having to downsize
  3. Ultra-High-Net-Worth – 24.25% are worried about having to downsize

Retired upper tier clients are living longer and many are worried about outlasting their retirement savings. How is this possible? Well, when you’re retired, your lifestyle and spending habits don’t slow down, if anything, they speed up because you have more time on your hands.

Think of luxury homeowners who are used to eating at the best restaurants or staying in 5-star hotels because their company has paid for it – or business owners who are used to getting huge tax breaks and wouldn’t think twice about dropping $500 on a bottle of wine at a restaurant or booking a flight & hotel to an industry conference.

Once you’re retired, the company stops paying for these things, the business stops giving you tax breaks but you’re still used to eating at the finest restaurants and having luxurious travel arrangements.

Seniors will represent 25% of the population by 2036, compared to just 14% in 2009. For many mortgage brokers, an ageing population facing such a steep growth trajectory, means opportunity to offer specialized financing solutions.

Our next article will share a case-study about how one mortgage broker helped his clients crush the downsizing dilemma forever by securing a $4.4M mortgage.