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Data & Research April 11, 2016
Baby Boomers' Retirement Confidence Decreasing
However, those who work with an adviser are better off, a survey finds.
Reported by Corie Hengst
Only 24% of Baby Boomers are confident they will have enough savings to
last in retirement, according to a research report from the Insured
Retirement Institute titled “Boomer Expectations for Retirement 2016.”
This is the lowest confidence level since IRI began its research on the
topic in 2011. Back then, 37% of Boomers had the same level of
confidence.
Inadequate savings is one reason for the lack of
confidence, as nearly half of the Boomers with savings report that they
have saved less than $100,000. This translates to less than $7,000 a
year in retirement income. Overall, one in five Boomers is concerned
that they won’t have enough savings to cover basic living expenses. The
study found that Boomers lacking confidence in their retirement security
have some common regrets, with 68% wishing they had saved more and 67%
wishing they started saving earlier.
IRI found that only 22% of
Boomers are confident with their preparations for retirement, 27% are
confident their savings with be sufficient to cover health care costs in
retirement, and only 16% are confident they can cover the cost of
long-term care.
A lack of savings is resulting in delayed
retirement for many workers. During the past year, 30% of Boomers
postponed their plans to retirement and 59% of Boomers now plan to
retire at age 65 or later. Twenty-six percent of Boomers now say they
plan to retire at age 70 or later, compared with 17% in 2011.
When
asked how they will pay for living expenses if financial resources are
depleted, 71% of Boomers say they will try to rely solely on Social
Security, and 54% say they will try to return to work. Nearly six in 10
Boomers expect Social Security to be a major source of income in
retirement, up from 43% in 2014.
NEXT: Holistic Planning Needed
The study underscored the
importance of establishing a holistic retirement savings plan that
includes working with a financial professional. More than eight in 10
Boomers who work with a financial professional say they are better
prepared for retirement as a result.
Sixty-eight percent of
Boomers who own annuities and 78% of Boomers who work with financial
professionals have at least $100,000 saved for retirement, compared with
only 58% of all Boomers.
More than six in 10 Boomers say they would prefer to meet with a
financial professional in person, and an equal amount say they are
unlikely to use an automated, online solution.
“The road to a
confident financial future begins with developing a holistic retirement
plan,” says Cathy Weatherford, president and CEO of IRI. “Unfortunately
most Boomers are not taking important planning steps. Less than 40
percent have determined a savings goal, and just over a quarter are
seeking help from a financial professional. Time is running out. Unless
Boomers begin to focus on their long-term needs now and commit to
savings, they will need to work longer and make steep cutbacks to make
ends meet in retirement.”
The full report is available here.