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.)