Helping Boomers With Retirement Fears

There are many fears and risks facing Baby Boomers approaching retirement.

A survey from the Indexed Annuity Leadership Council (IALC) in Des Moines, Iowa, shows that Americans in general fear outliving their income in retirement (25%), also being unable to afford their current lifestyle (23%) and potential health care expenses (19%). However, the survey also found, among Baby Boomers, one in four have less than $5,000 saved for retirement.

According to IALC Executive Director Jim Poolman, who is based in Bismarck, North Dakota,  one could assume those 25% who fear outliving their savings are the more educated people who have actually done retirement planning. He contends that those not planning are unconcerned because they have yet to learn  how much they will need.

Poolman says understanding the necessity to plan is  step one, along with determining what income will be needed in retirement. “Starting to save is imperative,” he says. “Even for Baby Boomers, it is better to start now than put it off another day.” He adds that setting a budget can help Boomers with retirement planning.

Mark Browne, head of the North American channel, global institutional and retirement marketing, at BNY Mellon Investment Management in New York City, says how much a retiree must have saved to pay bills and unexpected expenses comes down to the individual. “Part of a broader retirement plan is to start with the end goal and work backwards to do the necessary saving and investing, and ensure a good spending plan is in place.”

John Davis, director of retirement marketing and insights, also at BNY Mellon Investment Management in New York, suggests that income replacement ratios are good for savers in their early years, to give them an idea of how much to put away. However, as people approach retirement, this measure becomes a poor predictor because each individual will have developed a unique set of needs based on the retirement he envisions. This is the time for Baby Boomers to be directed to a professional adviser, who can put a plan in place, Davis says. He adds that long-term care insurance should be considered, and those employees who have a traditional pension plan will need to save less in their defined contribution (DC) plans.

Poolman advises Boomers who have a DC retirement plan to save enough there to get the entire company match or profit-sharing contribution; in that way, they can maximize their retirement potential.