Advisers Increase Boomer Retirement Confidence

The Insured Retirement Institute’s (IRI’s) third annual “Boomer Expectations for Retirement” survey found 37% of Boomers are confident in their retirement planning efforts in 2013, down from 44% in 2011. The survey indicates working with an adviser makes a significant difference in Boomer confidence regarding financial preparation for retirement.    

Forty-eight percent of Boomers who work with an adviser said they are extremely or very confident with their financial preparations for retirement compared with 28% who do not work with an adviser. Ninety-four percent of Boomers who work with an adviser have savings for retirement compared with 64% who do not work with an adviser.    

In addition, 71% of Boomers who work with an adviser have calculated a retirement savings goal compared with 34% who do not work with an adviser. And, Boomers who work with an adviser are more likely to rebalance their portfolios: 45% of Boomers who work with an adviser rebalance their portfolios once a year compared with 24% who do not work with an adviser.  

During a conference call hosted by the IRI to kick off National Retirement Planning Week, Greg Cicotte, president at Jackson National Life Distributors, said planning for retirement is a process over an individual’s years of retirement. A person’s needs at age 65 are different from needs at age 75 or 85, he noted, adding that it is important to keep in touch with financial advisers throughout retirement.

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Seventy-nine percent of working Boomers responding to IRI’s survey stated employment in retirement will be a source of income, an increase of 12 percentage points from the 2011 survey. The survey also shows a trend in planning to retire later: in 2013, 18% of Boomers stated they were planning on retiring at age 70 or later, compared to 11% in 2011.    

Of those Boomers who do not know at what age they will retire, the most common reason given was insufficient savings, stated by one-quarter of respondents in 2013.    

Retired Boomers have higher levels of confidence in meeting their financial needs in retirement. This is attributed, in part, to different retirement income sources for retired Boomers compared to working Boomers, who will more likely need an alternative source of lifetime income.Forty-eight percent of retired Boomers stated a traditional defined benefit pension plan is a major source of income in retirement, and 34% said a defined contribution plan is a major source.  

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By contrast, 38% of working Boomers expect a traditional defined benefit pension plan to be a major source of income in retirement, and 45% expect a defined contribution plan will be a major source. 

Boomers experience financial difficulties and have financial demands competing against saving for retirement. The survey found 24% of Boomers have trouble paying their mortgage/rent; 22% of working Boomers have stopped contributing to a retirement savings plan; and 21% of Boomers have postponed their plans to retire.  

The costs of college education for their children and caring for aging parents are also important considerations. Sixty-nine percent of Boomers are not confident they will have enough money to pay for their children’s college education, and 75% are not confident they will have enough money to pay the long-term care expenses of their parents.  

Charlotte Mooney, head of individual retirement markets marketing at ING U.S. Retirement, stated during the conference call that employers say employees need a complete financial solution, including a holistic plan for retirement from accumulation to asset allocation to decumulation, general financial literacy and a plan for short-term needs such as paying down debt and paying for children’s college education. Employers want to provide employees with actionable steps, and ING research shows employees expect this education from employers, she concluded.  

A complete report of IRI’s survey findings can be found at http://www.irionline.org.