The recession has been a game-changer for baby boomers who now expect to push back their retirement from an average age of 60 to 66, according to the 11th quarterly Allstate-National Journal heartland Monitor Poll. More than two-thirds (68 percent) also expect to work in some form after retirement.
These boomers find themselves between young people who, with more of their working lives ahead of them are more optimistic about the economy and their financial futures, and older people who are already retired. These “near-retirees” have had to contend with near unprecedented challenges brought about by the 2008 economic crisis, which in many cases has seen the depletion of life savings and the decline in the value of homes they might have once viewers as their primary asset.
The Allstate survey of 1,200 Americans found that 68 percent of retirees rely on Social Security as their major income source, and 62 percent of near-retired baby boomers expect it will be. Whereas 52 percent of retirees have a pension, only 37 percent of near-retirees have one. For 39 percent of these baby boomers, 401(k) savings are a significant part of their portfolios, compared to 16 percent of current retirees.
A fourth financial quarter wealth level study conducted by Millionaire Corner of households with a net worth between $100,000 and $1 million (not including primary residence) found that 72 percent participate in a 401(k) or other employer sponsored defined contribution plan, while 80 percent own IRAs.
The prolonged economic downturn has for many altered the traditional view of retirement as a time of “not having to work.” Half of survey respondents said they defined retirement in this way, a response more prominent (57 percent) among those who had already retired. Only 38 percent of those between the ages of 18 and 29 hold this traditional view of retirement.
Among near-retired baby boomers, 68 percent said it is “very” or “somewhat likely” that they will continue to work in some form. Of these, half said they will work out of choice, while 46 percent will work out of necessity.
Accordingly, near-retired boomers have a bleaker vision of retirement than those young and older. Nearly half (47 percent) said they expect it will be less secure than their parents, while 39 percent said it will less comfortable. In comparison, 35 percent of those between 18-29 forecast a more secure retirement than their parents, and 41 percent expect to have a more comfortable retirement.
And yet less than half of these households have discussed retirement planning with their primary advisor, according to another 2011 Millionaire Corner wealth level study. Ironically, this may be because they are more likely to be working than those with greater wealth.