Bank of America’s 2016 Insights on Wealth and Worth survey of the wealthy contains some very interesting findings. The survey studies the attitudes and behavior of wealthy and very wealthy adults in the United States. U.S. Trust, which operates as a division of Bank of America Private Wealth Management, has been surveying the perspective of the wealthy since 1993.
684 high-net-worth adult responded to the survey. Of those, 37% of the respondents were age 18-51, and 63% were age 52 or older. 65% of the respondents were men and 35% were women. 86% were currently married or living with a partner, and of those who were married, 75% were in their first marriage. Finally, 43% were retired, 25% were business owners, and 28% were employed full- or part-time. The survey results did not break down respondents according to ethnicity.
The survey of the wealthy was purely optional, so the common caveats associated with survey self-selection bias apply. Here are some key takeaways:
- 77% of respondents grew up middle class or lower
- 19% grew up poor
- 80% say their parents, while firm disciplinarians, encouraged them to pursue their own talents and interests
- Respondents said the one word that best describes the economy was “recovering,” but the second most frequent word chosen was “stalled”
- The wealthy attribute their success to three key factors:
- Hard work
- Family upbringing
Financial Freedom vs. Financial Stress
According to the report, “Wealth affords the financial freedom to focus on the long-term versus the pressures of living expenses.” While the short-term needs of the wealthy were considered “aspirational,” the short-term needs of the middle and lower classes are necessary. And while the wealthy are able to maintain “investment discipline,” most Americans must focus on the short-term necessities like food and housing. SunTrust CEO Bill Rogers recently highlighted this contrast:
We did a survey, which showed that 75% of Americans are under some kind of financial stress, 40% of Americans don’t have $2,000 saved for an emergency, when you switch to Millennials that’s 60%. One-third of Americans don’t have anything saved for retirement, so our recovery is a bit fragile from that standpoint.
— Bill Rogers, SunTrust CEO
Meanwhile, housing, food, and transportation are stretching American household budgets further and further. These costs comprise about two-thirds of the average family’s spending. Bank of America’s 2016 survey of the wealthy offers some key insights into the disconnect of America’s 1%, who don’t share these concerns.
This was most evident in Millennials, aged 18-35. While surveyed Millennials were notably more likely to say that 50% or more of their wealth was inherited, they attributed their wealth to hard work (79%) or innate talent (73%). To reduce the startling income inequality present in America today, we must understand this disconnect.