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Boomers Say They’re Ill-Prepared for Retirement

How prepared are the baby boomers for retirement? The results of a new survey, released this week by the Insured Retirement Institute, a nonprofit that represents insurers, broker-dealers, and asset managers, are not too encouraging.

The survey of 803 individuals aged 50 to 66, contains some glimmer of good news: 74% of this group expect their financial situation to improve or stay the same over the next five years.

But, the report indicates that most do not expect to amass enough to cover their expenses in retirement. For example:

  • Only 40% are extremely or very confident of having enough to cover basic needs in retirement.
  • Nearly two-thirds are not confident about covering medical expenses.
  • Three-quarters do not feel prepared for future long-term care costs.
  • 60% believe their financial security in retirement will be about the same or worse than that of their parents.

Boomers expect to rely more on income from 401(k) accounts than defined benefit pension plans:

  • 42% expect 401(k) and other defined contribution plans to provide a major source of retirement income, up from 36% last year.
  • Only 37% expect to rely significantly on traditional pension plans, unchanged from last year’s survey.

Not surprisingly, a growing number expect to postpone retirement.

  • 35% expect to retire after age 66, including 23% who expect to work into their 70s. (The numbers from last year’s survey were 28% and 17%, respectively.)

And more expect to work in retirement to supplement their income.

  • 64% expect wages to be a source of retirement income, up from 57% last year.

Particularly at risk are single people and middle-income boomers, with annual earnings of between $30,000 and $75,000. “While most boomers report a higher level of confidence than they did last year, these two cohorts are the exceptions.”

  • 72% of single boomers are not confident they will have enough money to live comfortably throughout their retirement years, compared to 60% of married boomers.
  • 38% of unmarried boomers expect their financial security in retirement to be worse than that of their parents, compared to 26% of married boomers.
  • 21% of unmarried boomers had to prematurely withdraw funds from their 401(k) IRA, or other retirement investments, compared to 14% of married boomers.
  • 70% of middle-income Boomers are not very confident about having enough money to live comfortably in retirement.
  • 40% of middle-income households stopped putting money into a 401(k), IRA or other retirement account (compared to 37% last year.)

Also see:

Secrets of the 401(k) Millionaires

Retire Here, Not There


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    • I have to agree with B. Graham, especially in today’s interest rate market. I see far too many baby boomers sitting in cash, or “shopping” banks for a 1% return. They seem completely unaware that times have changed and oblivious to the risks of being too conservative. While some see the markets as too much of a gamble, mutual funds offer you the opportunity to hold many investments and be broadly diversified in return for a small investment amount. My recomendation for anyone looking to retire is to meet with a Financial Advisor and put together a full financial plan that encompasses all of your financial goals. Do this before you retire to determine the type of lifestyle you can expect, there is nothing more depressing than meeting with someone in their 70′s and letting them know that they will run out of money in the next 5 years due to overspending or ill- investment.

    • No matter how much you prepare for retirement OPM has created financial hardships for many federal retirees by delaying and not timely processing federal annuities. I would suggest having a year’s worth of income available as OPM only issues interim payments. In my case, I only receive 35% of my entitled annuity. Following up with OPM on many occasions appears unsuccessful as the responses were not informative nor helpful. At present, I can not find out when my federal annuity will be finalized. I was told that my paperwork was received by OPM but that my paperwork was not yet processed. I am already four months into retirement while only receiving a nominal federal annuity.

      If you are a federal employee contemplating retirement be prepared financially. Also, the OPM delays may create negative tax issues depending when you receive the retroactive lump sum annuity. It is impossible for tax planning as one does not know when the federal annuity would be finalized and a retroactive lump sum payment would be received.

      This information should be mentioned in articles.

    • Hey. The entire retirement model has changed dramatically with advances in medicine. People are now living into their 90′s. When I started in the 60′s, most retirees kicked the bucket shortly after they retired. Smoking and drinking was the norm. Now, its exercise, healthy food. You can’t expect Baby Boomers to retire in the numbers that previous generations retired. They have to keep working till they drop.

    • I’m no insider, but I have benefitted richly by investing in the stock market (indirectly through mutual funds in a 401(k) and IRAs). The key strategies involved are diversification (dividing one’s investments between stocks and bonds) and dollar-cost averaging. It also helps to take advantage of panicky market sell-offs, not by selling, but by continuing, or increasing, purchases of shares when they are cheap.

      I haven’t found any better way to build wealth than through investment in the stock and bond markets.

    • The age group 50 – 66 has been the beneficiary of a daft federal government intent upon taxing them into little or no retirement. The beneficiary of a stock market that favors a few rich insiders who periodically sweep the profits away from the 50 – 66r’s 401K and IRA earnings. Bare the burden of supporting an international economy of countries who would burn our flag on any given day of the week. And so on… Now ask me again if I am prepared for retirement. I was prepared for retirement 20 years ago!!!

About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.