Editor’s note: This survey was conducted for Senior Market Advisor by The Boomer Project and its associated partner, the Southeastern Institute for Research. The Boomer Project is a Richmond, Va.-based marketing research and consulting company focusing on baby boomers and marketing, started in 2003 by Matt Thornhill.
This year’s study was taken among 411 adults between the ages of 50 and 69, which is a slightly younger and more boomer-oriented sample than those who responded to previous SMA Senior Surveys. As a result, about half of the younger respondents (those ages 50-59) are still working, while three-quarters of the older group (those 60-69) are retired. Average incomes are also subsequently higher (a median income of $72,000 between the two groups) and average net worth varies substantially ($341,000 for the younger group and $495,000 for the older groups).
While they appear to be seemingly comfortable at their economic station in life, those who responded to our survey do have some serious concerns about their long-term financial future.
Yet, true to prevailing boomer attitudes, the younger respondents remain optimistic they’ll be able to make up the difference or change their financial course. In classic boomer form, they also admit they may be less prepared for retirement than they’d like to be.
John Martin, SIR president and CEO (who, along with Thornhill, authored the book “Boomer Consumer: Ten New Rules for Marketing to America’s Largest, Wealthiest and Most Influential Group”), says that mix of optimism and lack of complete preparedness is a generational hallmark.
“Boomers grew up at a time when the economy was roaring and whole industries were being created because there were so many of them around,” Martin says. “As a result, boomers have this ingrained sense of optimism. Ask them and they’ll admit, ‘Yes, I don’t have enough now for retirement, but in five years I’ll be fine.’”
Most interestingly, the survey revealed a tangible connection between financial health and physical health. Those who take the time and energy to feel more confident about their financial planning — mostly by interacting with a professional — also tend to pay more attention to their diet, exercise and overall well being; excellent advice for advisors.
Seven major truisms revealed themselves in The Boomer Project’s research; we shall explore each and hear (albeit anonymously) from some of those who responded to the queries.
1. The economy has affected how people view their financial self. Consumers rate their financial situation better in 2007 than now in 2008. In fact, 1 in 5 see their condition being even worse at the end of 2008, with those aged 50-59 slightly more likely to see things being better. And, consumers in 2008 are more likely to rate their financial situation worse on “where they thought they might be financially at this stage in their life” in 2008 versus their self-assessment in 2007.
“Our investments and income are not keeping pace with rising prices,” says one respondent. “We were living comfortably, but now we are having to adjust our living style because of the cost of gas and other essentials.”
2. Despite the negative personal financial impact of the economic downturn, optimism prevails among boomers. Sixty-three percent of people ages 50-59 in this study (compared to 40 percent of those ages 60-69) think their financial condition will be somewhat or much better five years from now. Martin says this is totally consistent with boomers’ trait of “boundless optimism.” As an age group, they have always had the world cater to them — things have always turned out for the better.
“I managed to sell my house and move into a smaller one,” one survey-taker comments. “I paid off my car, and all of my credit cards except one. I get a better pension than I expected, and I rolled my 401(k) over into an annuity.”
3. Most are, however, not financially ready for retirement, and they acknowledge it. Only one in 10 are ready as they report their net worth tops $1 million. Seven in 10 are worried about their retirement finances, especially those aged 50-59. Older consumers are most concerned with outliving savings; younger ones cite reducing debt and saving for retirement as their biggest financial planning issue. And for good reason. The median total net worth of the entire group surveyed is only $308,000.
“We saved all our lives for retirement, but until you reach that point, you aren’t quite sure if you will make it,” noted one respondent.
“Until I was in my late 40s, I was living paycheck to paycheck,” says another. “I never realized that saving and investing could improve your financial outlook so quickly.”
There are additional financial pressures, too. One in 5 report that their financial responsibility goes beyond themselves to another adult family member; half of the people receiving support are adult children, especially among the younger respondents.