Despite the best efforts of workplace-sponsored retirement plans and even the relatively positive status of Social Security, many baby boomers say they have lost confidence in their ability to live comfortably in retirement.
As part of its kickoff for National Retirement Planning Week, the Insured Retirement Institute says its research finds that only 27% of boomers feel confident their savings will last them through retirement.
Thats a 10-point drop from 2011 when the study was first conducted, said IRI president and CEO Cathy Weatherford pointing to an increasing need to get younger employers more fully vested in employer-sponsored savings programs.
Interestingly enough, despite the drop in confidence, 44% of boomers are becoming more optimistic of their financial outlook for the next five years, she said during a conference call on Monday morning.
Part of that stems from market gains since the crash in 2008 and part of it is that many of them have decided to stay working longer to make sure they have enough money to live on in retirement, she added.
What is happening is many boomers may have had their last payday and many are closer or nearer to their last payday. It is a scary proposition for many boomers, who are finally realizing now it is up to [them], Weatherford said.
Now they have to ask themselves how they can make what they have saved last for 20 years or more.
Unfortunately the answer is, Im not quite so sure, she said.
When it comes to covering medical expenses in retirement, only 28% of respondents felt that the amount they saved for retirement would be sufficient to cover their medical expenses in retirement. Only 19% felt they could cover their long-term care needs, the study found.
Four-in-10 boomers said they have no savings for retirement, Weatherford said. They will completely rely on Social Security in retirement.
This highlighted two major trends. The first is that boomers are gaining clarity about when they will enter retirement, she said. Even five or six years ago, most people expected to retire at the traditional retirement age of 65.
With the financial meltdown, the future looked foggy to them, so now, in 2015, clarity is coming to their future and they are planning to retire at more advanced ages, Weatherford said.
The survey found that 28% expected to retire at age 70 or later. In 2011, only 17% of Boomers expected to retire at age 70 or beyond.
Baby boomers are redefining another stage of life for all of us, she said.
In the past year, 24% of baby boomers postponed their plans to retire, the report found
More than half of the boomers surveyed said they expect to budget income in retirement for travel and leisure activities. Among boomers with less than $250,000 saved up for retirement, 40 percent said they expect to budget income for these activities.
Fifty-eight percent of boomers have not made any preparations for future cognitive issues. Among those who have thought about it, most have just documented their financial affairs and recorded their wishes.
Like many studies before it, the IRI study found that 86% of boomers who plan for retirement with the help of a financial professional are better prepared as a result of their advisers help.
Dr. Annamaria Lusardi, Denit Trust Chair of Economics and Accountancy for George Washington University School of Business and academic director of the Global Financial Literacy Excellence Center said that if people begin saving for retirement at age 23 and continue through age 61, they will have a lot more to work with in retirement than someone who starts thinking about retirement at age 50.
It is hard to support 30 years in retirement with a 40-year career, Lusardi said. If you start at age 50 it is going to be really hard to add enough savings at retirement. Data show that people dont save for the long run. They also dont save for the medium run, like putting money aside for their childrens education and putting no money aside for emergency or rainy day funds.
She pointed out that less than 50% of workers put money aside for those events.
This is important. If you havent satisfied the basic needs, planning for retirement might take a back seat to financial decision making, Lusardi said.
National Retirement Planning Week runs through April 17. Find out more at www.retireonyourterms.org.
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