Saving and spending remain top concerns for baby boomers concerned about retirement. How are their habits changing?
Nearly three-fourths of baby boomers started saving more and spending less in the last year, according to report released this month by the nonprofit AARP.
Emergency funds, retirement needs and declining income were most often cited as the reasons for changes in saving and spending habits, according to the AARP 2011 Bulletin Survey on Consumer Saving and Debt.
Of the 617 participants age 50 an older, 83 percent said they wanted to have more money available for emergencies, 70 percent said they wanted to have more money saved for retirement and 51 percent say their saving and spending habits have been affected by declining household income. Fear of job loss was cited by 26 percent of participants as a reason to save more and spend less.
Two-thirds of boomers say they have tired to reduce their debts by paying in cash or putting purchases on a debit card instead of using a credit card, and 16 percent say they tried to negotiate more favorable terms with their lenders. Participants also reported trying to reduce debt by cutting down on discretionary spending, such as eating out and taking vacations, and by paying more than the minimum on their credit cards each month.
More than 30 percent of participants age 50 and older carry a monthly credit card balance, 44 percent carry a mortgage – the most common type of debt – and 41 percent have car loans. Seven percent owe on student loans, and 8 percent owe cash to others.
Avoiding debt is cited as the most important lesson learned from the recession and the current economic environment, according to Mass Affluent baby boomers surveyed by Millionaire Corner in March. Mass Affluent investors have a net worth of $100,000 to $1 million, not including primary residence. Fifty-three percent of these Main Street investors say the economic downturn has taught them not to take on as much debt in the future. Nearly 40 percent say they will work longer than they had originally planned and 44 percent say they now feel that their home is not a stable financial asset.
The Mass Affluent say they are reconfiguring saving and spending patterns largely due to fears about having enough money for retirement. Nearly 30 percent say their household needs to save more to meet their financial goals, while 35 percent say they have reduced their debt and 17 percent say they have saved more in safe cash accounts.
AARP, founded in 1958, is dedicated to helping people age 50 and over improve their lives.