Baby boomers – even the youngest of whom are just a decade or so away from retirement age – are in large measure unprepared for retirement, having failed both to plan adequately and save enough, according to a study released last week by the Insured Retirement Institute.
According to the study, 42% of baby boomers have no retirement savings. Among boomers who do have retirement savings, 38% have less than $100,000 saved for retirement. Further, only 38% have calculated the amount they will need to retire. This year’s Boomer study demonstrates yet again the marked difference between Boomers who have engaged financial professionals to help them build comprehensive and effective retirement plans, and those who have not. The study found 79% of boomers who work with financial professionals have at least $100,000 saved for retirement.
Only 25% of boomers believe that they will have enough money in retirement, and only 28% believe they are doing (or did) a good job financially preparing for retirement. While a growing number (25%, up from 20% in 2017) plan to retire earlier than age 65, 29% expect to work past age 70.
Forty-six percent of boomers expect they will need $45,000 (in current dollars) or more in annual retirement income. Assuming the current average Social Security benefit of $16,848, an individual would need to generate at least $28,152 in additional annual income from a combination of pension benefits and retirement savings. At current rates, a life annuity paying $28,152 in annual guaranteed lifetime income would cost approximately $430,000, far more than most Boomers have saved.
“Many Americans are simply not financially prepared for retirement,” said Cathy Weatherford, President and CEO of the Insured Retirement Institute. “This is especially worrisome for Baby Boomers, a generation whose oldest members are past 70 and whose youngest will turn 65 in just over a decade. Those who have not adequately prepared for a life without regular paychecks from employment must educate themselves, plan adequately, save as much as possible and consult financial professionals to create effective and realistic retirement strategies.”
Baby boomers began reaching age 65 in 2011, 26 million so far and another 50 million will turn 65 over the next 10 years.
The study, “Boomer Expectations for Retirement 2018,” is based on a survey of individuals broadly defined as members of the Baby Boomer Generation. The research was conducted by means of internet interviews with 806 Americans ages 55 to 71. Data were weighted by age and gender to the 2016 American Community Survey. Data was collected from March 13 through March 16, 2018. The margin of error for the sample of 806 was ± 3.5%.
- See a PDF version of the full research report.
About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is the leading association for the retirement income industry. IRI leads a national consumer coalition of more than 30 organizations, and is the only association that represents the entire supply chain of insured retirement strategies. IRI members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. As a not-for-profit organization, IRI provides an objective forum for communication and education, and advocates for the sustainable retirement solutions Americans need to help achieve a secure and dignified retirement. Learn more at www.irionline.org.