Baby boomers are retiring in droves. Some are well prepared while others never prepared or lost much of their savings to the great recession.
For the fourth year in a row, the Insured Retirement Institute (IRI) has issued a report detailing baby boomers' expectations for retirement in 2014. In it, the IRI finds that while confidence in retirement preparation among boomers continues to slip, slight improvements were made in several areas, including the percentage of boomers with retirement savings, their total savings, as well as the number of boomers with a retirement savings goal and a planned retirement age.
“One of the most striking developments since we began this research series is the decline in boomers who did not know when they would retire,” IRI President and CEO Cathy Weatherford said. “That number has been cut in half. While the research shows that they are deciding to retire later in life, the important thing is that they are grappling with important aspects of retirement planning and beginning to develop a clearer picture of where they are and where they intend to be.”
The following are the five boomer expectations for retirement in 2014:
1. Confidence in retirement
Baby boomers' confidence in retirement has declined since 2011, according to IRI. In fact, the number of boomers who are confident in their efforts to prepare financially for retirement has dropped 9%. In 2011, 44% of boomers surveyed were confident in their retirement plans. Today, however, only 35% say they are confident.
The report also noted a sharp increase among those showing little to no confidence at all regarding their retirement plans and outlook. A full 31% of boomers reported having little to no confidence in their retirement preparations in 2014, up from 22% in 2013.
2. Financial outlook
Boomers don't seem to be satisfied with how they're doing financially. In fact, in 2013, 77% of boomers reported being satisfied with the way things were going, while 19% stated they were dissatisfied. One year later, only 65% are satisfied, while 32% indicated they are dissatisfied.
It's not all doom and gloom, however. The report shows that boomers are beginning to show more optimisim regarding their financial situation -- with some thinking it may improve over the next five years. As the graph below illustrates, 34% of boomers feel their financial situation will improve somewhat.
3. Planned retirement age
Though boomers may seem unclear about their financial preparations for retirement, they are, each year, becoming more certain of their retirement age. In 2011, 35% did not know when they would retire. Today, only 17% are uncertain.
With this retirement age clarity comes the likelihood of retiring later in life. The percentage of boomers planning to retire between the ages of 62 and 65 was lower in 2014 than in any prior year. On the other hand, the percentage of boomers planning to retire between the ages of 66 and 70 (or later) has never been higher.
The number of boomers who expect to retire at 70 or older has steadily increased each year, rising from 17% in 2011 to 28% in 2014, according to the report. There is one exception to the trend of retiring later, however. There has been an uptick (to 12%) with those deciding to retire before age 62, compared to 6% in 2013.
4. Retirement savings, planning behaviors and other considerations
According to IRI, boomers in 2014 are slightly more likely to have savings for retirment compared to prior years. However, the savings aren't sufficient. In 2014, 80% of boomers had retirement savings, while only 77% to 78% of boomers had savings in earlier years.
Though one in five boomers in 2014 do not have savings for retirement, nearly half (48%) of those who have saved have put away $250,000 or more. On the other hand, 11% have less than $50,000 saved for their golden years, while 9% said they didn't know how much they had saved.
5. Boomers working with a financial advisor: a more confident demographic
It's a legitimate correllation: those boomers who are working with a financial advisor feel more confident about retirement and exhibit better retirement planning behaviors. In fact, twice the number of boomers are confident in having sufficient savings for retirement, compared to boomers who are planning for retirement on their own.
The IRI report pointed to findings from the Centre for Interuniversity Research and Analysis on Organization (CIRANO), which found that better savings behaviors acquired through the client-advisor relationship contributed to the greater assets observed with those working with financial advisors. Further, the organization found that professional advice has a positive influence on other retirement planning aspects, including increased usage of tax-advantaged savings vehicles, improved asset allocation and greater portfolio diversification.
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