How the Wealthy are Coping with the New Normal

Quite well, it seems. According to the most recent Merrill Lynch Affluent Insights survey, fewer than half of the well-to-do said they scaled back their 2009 expenditures on "personal luxuries" as a result of the economic downturn. And even among those that did do some belt-tightening, it's not as if they started tracking their budget with the zeal of a Mint enthusiast. The Top five cost-cutting moves cited in the survey:

• Cut Energy Costs (48 percent)
• Become More aware of Day-to-Day/Short-Term Cash Flow (38 percent)
• Vacation Less (30 percent) or stay closer to home (20 percent)
• Scale back on recreational activities such as golf and skiing (29 percent)
• Delay big ticket expenditures such as home renos and car purchases (16 percent.)

It's not clear if the energy efficiency was all about programmable thermostats or shelling out six figures for an electric Tesla. But the list makes it clear the affluent (investable assets of more than $250,000) are doing just fine as just 1 in 6 had to rethink a major capital expenditure such as a home reno, in 2009.

A more intriguing part of the survey asked the wealthy for retirement tips for the non-retired. Take advantage of catch--up contributions on your 401(k) and IRA? Nope. Invest in your human capital to retire rich? Not exactly.

If you're within 10-15 years of retirement their most popular tips:

• Build a plan around what is important to you in retirement. (51 percent)
• Have a plan to manage retirement income through retirement (47 percent)

Hmmm. Reasonable advice if you're already rich. But not much help if what's important to you is simply being able to afford to retire period. I wish they had dropped some nuggets on how they got to be affluent in the first place. Was it astute investing, optimizing their human capital, a nice inheritance?

The third most popular retirement tip: Pay Down Debt. (40 percent.) Now we're talking. While there is much focus on how to earn and save your way to a comfortable retirement, the debt part of the equation sometimes is overlooked. But it's rich advice indeed. The less you owe heading into retirement, the easier it will be on your nest egg to keep feeding you that steady income stream through retirement.

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