Boomers’ retirement confidence continues to slip, the Insured Retirement Institute said in a report released Monday. Just 37% of boomers surveyed said they were confident in their retirement preparation, down from 44% in 2011, according to the third annual “Boomer Expectations for Retirement” report.
What’s especially troubling is that 61% don’t anticipate their financial situation improving anytime soon.
The survey found a significant gap in confidence between retired respondents and those who were still working. Among retired boomers, 46% said they were confident in their ability to live comfortably throughout their retirement, while less than a third of working boomers agreed.
“Boomers continue to face financial struggles in an era when they have the bulk of responsibility for planning and saving for retirement,” Cathy Weatherford, IRI President and CEO, said in a statement. “This has resulted in a generation that lacks confidence in their financial futures as they approach their retirement years.”
There is good news, though, Weatherford noted. “Boomers who work with a financial professional are much more confident in their retirement plans. They also are more likely to have determined a retirement savings goal, more likely to have retirement savings, and more engaged with their retirement plans. Developing a holistic retirement strategy, saving and remaining engaged with your plan—these are the fundamental steps toward attaining financial security during one’s retirement years.”
In fact, while barely more than a quarter of respondents said they were very or extremely confident in their retirement planning, when looking just at respondents who work with an advisor, that number increases to 48%.
The report found a significant gap between boomers who work with advisors and have determined a retirement savings goal, and those who don’t work with advisors. While 71% of boomers with an advisor have a goal—and nearly all of them have savings—just 34% of boomers without an advisor have determined a savings goal and less than two-thirds have started saving.
Although fewer boomers are unsure about when they will retire, overall they seem to be planning on retiring only partially or delaying retirement altogether. More than one in five boomers said they would postpone their retirement and 18% said they planned to work past age 70. Nearly 80% of respondents who are still working said they expected working in retirement would be one source of income, up 12 percentage points from 2011. However, just 45% of retirees said they weare still working.
“Expectations of sources of income do not always match up with actual experience,” the report said. “It is important when planning for retirement that boomers have realistic expectations about sources of income in retirement.”
For example, 46% of respondents said Social Security would be a minor source of income in retirement. However, “IRI data shows 22% of boomers have no savings for retirement, and of those boomers who have savings for retirement, 41% have less than $100,000 saved. This data indicates Social Security will be a significant source of income for many boomers.”
One reason for boomers’ falling confidence may be that they’re overstretched. Almost 70% of respondents said they didn’t think they’d be able to pay for their kids’ college education, and fully three-quarters doubt their ability to help their parents with long-term care expenses.
“Retirement is not an age, but an ongoing stage of life,” the report concluded. “Boomers are still facing financial challenges and trying to balance competing needs for their financial resources. Despite these challenges, it is possible for boomers to achieve their retirement goals. Working with an advisor is a major factor in achieving those goals.”
-----Read Milevsky: What Is a Proper Spending Rate in Retirement? on AdvisorOne.