Are baby boomers at long last beginning to feel anxiety about how they will arrange for retirement income and related matters?
Michael Thompson, in advisor programs at Transamerica Retirement Management, St. Paul, Minn., thinks they are.
So do other advisors, meaning advisors may finally be able to ease up a bit on trying to make boomers aware of retirement realities. Now, they need to focus more on addressing that anxiety in productive ways. Some ideas follow.
“Ten years ago, the stock market was booming and baby boomers were all about accumulation, with no end in sight,” recalled Thompson, a former advisor. Back then, boomers did not show much concern about transitioning into retirement, he said.
But today, retirement concerns are evident. For instance, in one TMR focus group, consumers were asked what they plan to do with the money they’ve accumulated for retirement.
The response was “shocking,” Thompson said. “There was dead silence. The people in the room were very uncomfortable. Some were shifting in their seats or looking at each other. This continued until the session leader stepped in to nudge them along.”
The focus group consumers didn’t know what they would do, he said.
That tracks with what J. R. Thacker is seeing. Today’s boomers are not necessarily panicky, but they are definitely worried or concerned, said the president of Thacker & Associates, Bristol, Va.
“It’s not uncommon for new boomer client to come into the office asking, point blank, how much will this give me in retirement?” Thacker pointed out.
These boomers tell Thacker that they want “as much money as possible” for their retirement. Then, he said, they ask “will this last me the rest of my life?” Some also ask, “will inflation hurt me?” Or, “will a big loss in the equities market restrict my income or cause me to run out of money?”
All of this revolves around maintaining lifestyle, he surmised. “Boomers keep asking, ‘will my income stay the same?’”
He attributes this concern not only to the fact that boomers are nearing retirement age, but also to the fact that they’ve seen retired family members and friends suffer losses, cut back on retirement income withdrawals, and even go back to work.
They are also seeing parents who live longer to the point of outliving their money, added Wayne Maslyk Jr., co-founder and vice president of Great Lakes Benefits & Retirement Group, Sandusky, Ohio. “Or they see parents struggling to find the money to pay the prescription drug costs.”
“And some are rearing their grandchildren, so they are spending money there that they would otherwise be saving for retirement,” he said.
For whatever reason, boomers have finally “heard the wake-up call,” concluded Maslyk.
Like Thompson, Thacker has noticed something “shocking” in all of this: “Many boomers say, ‘I want to draw as much income as I can until I’m 65 (assuming they retire before then), so I can do all the things I want to do. Later on, I’ll be content to stay home, not travel, etc., so I will draw out less at that time.”
That’s shocking, Thacker said, because it goes against inflation. “We need to educate them on what the future will likely be like, say, at age 75 or later.”
What about desire to leave money to the children? “They said, ‘if money is left over after we die, that’s fine.’ But they’re not worried about this at all.”
Their chief worry, he reiterated, is having enough money in retirement for themselves.
Hence, falling portfolio values make boomers “very anxious,” he said.
Maslyk sees the same. In the 1990s, boomers would take a lot of risks with their money, he recalled, citing “knee-jerk trading” as an example. Some still do that, he said, but many others are now much more cautious.