Survey Says Boomers Keep Old Retirement Strategies
Many baby boomers are sticking with their original retirement savings strategies, in spite of recent stock market volatility and the Sept. 11 terrorist attacks.
The majority of boomers who participated in a new survey sponsored by Allstate Financial Corp., Northbrook, Ill., said they expect to save about as much and invest at least as aggressively as they have in the past.
Sixty-six percent of the participants told researchers they planned to save the same amount as before, and 74% said they planned to use the same investment style.
Only 10% said they would invest much more conservatively, while 3% said they would invest much more aggressively.
Harris Interactive Inc., Rochester, N.Y., carried out the survey by conducting telephone interviews of 1,004 U.S. residents before Sept. 11, and 294 U.S. residents after Sept. 11.
Participants had to be between the ages of 40 and 55. Their annual household incomes ranged from $35,000 to $100,000.
Allstate says the boomers resistance to changing strategies is a weakness, not a strength. “Americas largest generation ever may be headed for a financial crisis,” the company warns.
Many boomers surveyed expect to have large amounts of mortgage debt and credit card debt when they retire, and they say they will need the equivalent of about $30,000 a year in current dollars for living expenses, Allstate says.
The participants reporting having an average of only $120,000 in retirement savings. If inflation averages 4% a year and interest on savings 8%, a boomer will need $1 million at retirement to cover living expenses without depending on Social Security, according to Allstate.
Reproduced from National Underwriter Life & Health/Financial Services Edition, December 3, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.