The baby boomers are charging into retirement, and many are finding their dreams of a carefree post-employment lifestyle colliding with reality.
They started saving too late and they are not saving enough.
For the seventh consecutive year, the Insured Retirement Institute (IRI) studied the boomers’ expectations and readiness for retirement. Again this year, the majority of boomers reported insufficient retirement savings and lack of planning for their post-working years.
Only 54 percent of boomers have any retirement savings, the lowest percentage recorded in the seven years of the baby boomer report. Only four in 10 have even tried to calculate how much they need to save to retire.
Unsurprisingly then, only 23 percent of boomers believe that their savings will last throughout retirement, or that they have done a good job preparing for retirement. Paradoxically, however, six in 10 boomers believe their retirement income will cover their basic expenses, and give them some leftover funds to travel and enjoy leisure activities.
The 2017 study reveals that 85 percent of boomers believe it is important to have a source of guaranteed lifetime income in addition to Social Security. However, only 8 percent would consider purchasing an annuity.
The outlook is brighter for those who work with a financial professional. Eighty-five percent of boomers who work with financial advisors believe they are better prepared for retirement because of that relationship.
More than 90 percent of boomers who work with financial professionals actually have retirement savings. Further, 75 percent of those individuals have saved $100,000 or more. Less than one-half of those without an advisor have savings at the $100,000 level.
Since IRI’s inaugural baby boomer report in 2011, the number of Americans over the age of 65 has risen more than 18 percent, reaching nearly 48 million in 2015.
Other findings from the report include:
- Almost one-third of boomers think they will need an annual income between $45,000 and $75,000 in today’s dollars during retirement.
- Six in 10 boomers expect Social Security to be a major source of income, the highest recorded in the seven years of the boomer report.
- Of those who have tried to calculate how much they need to save to retire, only six in 10 included estimates of health care costs in their calculations.
- More than eight in 10 boomers underestimate the percentage of their income which may be needed for health care costs.
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com.
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