A new study finds that retirement readiness among the baby boomer generation continued its decline in key confidence measurements that look at whether the age cohort was comfortable with covering medical expenses and income needs when they exit the workforce.
The Insured Retirement Institutes fourth annual retirement readiness report offers a grim picture for retirees. Thirty-five percent of respondents said they were extremely or very confident they were doing a good job of preparing financially for retirement. Also, 33% of respondents feel they will have enough money to live comfortably in retirement with their spouse, a one percentage point decline from 2013s study.
In terms of preparedness when saving enough for medical expenses in retirement, approximately 36%, a two percentage point uptick from last year, report that they were either extremely or very confident.
For those with low-to-no confidence, all categories saw increases, including 31% reporting they are doing or did a good job of preparing for retirement. Additionally, approximately 28% of the survey respondents, which was a tally of 800 Americans aged 51 to 67, expect they will have enough money to pay for doctor visits, prescription drugs and hospital stays.
The percentage of respondents who didnt know when they might retire, meanwhile, declined by nearly 10 percentage points to 17%. Moreover, a quarter of baby boomers postponed their plans to retire over the past year and approximately 28% plan to retire at age 70 and older.
However, retirement confidence more than doubles for baby boomers who work with an adviser, with 94% reporting having a retirement savings goal when they collaborate with a financial professional.
Financial advisement lesson
Similarly, the Employee Benefit Research Institutes 24th installment of its annual Retirement Confidence Survey said last month that approximately 18% are very confident and 37% are somewhat confident about their future financial needs.
Also, during America Saves Week earlier this year, Dallas L. Salisbury, president and chief executive officer of the EBRI and chairman of the American Savings Education Council, highlighted that employers can assist with the current savings epidemic. Salisbury explained that workers who conducted retirement-needs calculations were more confident. Complementing this goal, he says that the theme for this years America Saves Week is to set a goal, to make a plan and to save automatically.
Nevin Adams, director of the American Savings Education Program and co-director of the EBRI Center for Research on Retirement Income, explained that it makes a difference to take some steps to figure out what that [the retiree] goal is.
Just because people arent confident about their results doesnt mean that someone shouldnt try to do something about that, Adams says. In fact, theyll find if they take some steps to do some sort of retirement planning, either by themselves or with an adviser, they will feel better about the situation even if they end up setting higher goals.
He adds that failing to take these steps can be crippling to future financial needs.
Its not that ignorance is bliss, its that ignorance is freezing, and it sets in certain inertia [when planning for retirement], he explains.
When determining these goals, employees can accept some help from their employers. Financial wellness programs that afford financial advisers, financial planners and education are priceless additions to the retirement equation, according to players in the retirement planning industry.
Weve been rolling out holistic financial wellness and advice offering our employers who want to have that full planning experience, says Rich Linton, president of individual markets at ING U.S. Retirement Solutions. Were seeing highly engaged employees coming to onsite, worksite seminars in high numbers and many of them making the choice to sit down with a financial adviser or over the phone to complete a financial plan.
According to Katie Libbe, a vice president of consumer insights at Allianz Life, this effort by employers helps both the adviser and the employee.
Its a huge positive if the employer offers this type of services with financial advisers for free at the workplace, Libbe explains. Its almost an implied endorsement of the financial adviser. There is some skepticism out there on how do I chose a financial adviser to help me and not to take advantage of me The employer subsidizing it and sponsoring it is a huge positive.
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