Baby boomer optimism is being put to the ultimate test as they face retirement income concerns
©Spectrem Group 2011
Baby boomers, a generation defined by their optimism, are suffering severe retirement angst, according to a new poll. Born between 1946-1964, the 77-million-strong generation has serious concerns about having enough money for retirement, indeed whether they will be forced to keep working.
An Associated Press-LifeGoesStrong.com pool found that 44 percent express little or no faith that they will have enough money to retire with financial security. The “Live for today/Don’t worry about tomorrow” attitude popularized in 1960s rock songs is coming back to haunt boomers. One in four say that have no retirement savings, which, coincidentally or not, is the same number who are still working and fear they will never retire.
Boomers, living longer than previous generations, face several challenges in their retirement years. Their workplace retirement plans, personal investments, or real estate lost value over the course of the economic downturn. Meanwhile, low interest rates are a stunting the growth of what savings they have.
The 2011 Retirement Confidence Survey reinforces boomer pessimism about their retirement, which as been fueled by high unemployment, the government fiscal crises, and rising health care costs.
Spectrem Group studies of households with a net worth between $100,000 and $1 million, not including primary residence (the “Mass Affluent”) , confirm these attitudes toward retirement. Nearly three-quarters are most concerned with maintaining their current financial position. Sixty-seven percent are most concerned about having enough money set aside for retirement, while 61 percent fear they won’t be able to retire when they had planned.
Nearly a third said that because of the recession, they will be delaying their retirement. Almost 20 percent said that they had been forced to make early withdrawals from funds earmarked for retirement. Of these, this was a greater concern for boomer-era investors. Also of more importance to this age group was the hard lesson learned from the recession that their primary residence is not a stable financial asset
While it important to nearly all Mass Affluent investors that they have a fixed income during retirement, only 58 percent are confident they will have sufficient funds to live as they would like after they retire. This may account for a more aggressive attitude toward growing their investments. In 2009, 64 percent of investors surveyed by Spectrem Group said it was more important to protect their principal than grow their investments. In 2010, 55 percent expressed this attitude.
Retirement has been something of a rude awakening for a vital generation that has been defined by its “can do” spirit. The generation that ushered in epochal changes in everything from civil rights to popular culture is likely to put its own stamp on retirement as well.