The average baby boomer may be forced to wait until 75 to retire, according to My New Financial Advisor (MNFA), a lead-generation service that connects clients with advisors.
MNFA based its conclusion on an analysis of 1,600 retirement reports submitted by boomers to FreeRetirementReport.com, a website offered by MNFA that evaluates users’ current and expected income and expenses, then produces an analysis of their retirement outlook. Users input their own information, which is compared to industry standards.
“The models are using the same assumptions advisors are using,” Frank Troise (left), founder of MNFA, told AdvisorOne on Tuesday. However, “the asset class assumptions in the ‘new normal’ are absurdly high.”
Among the issues preventing boomers from retiring earlier are loss of income, insufficient savings, low returns, higher-than-expected expenses, past-due taxes and low wage growth.
One factor contributing to boomers’ late expected retirement age is that they aren’t adjusting their expectations for income and expenses in retirement. “There’s almost an indifferent attitude to what income would look like in retirement,” Troise said.
“What the models are saying is if you don’t increase your income or reduce your expenses, you’re not going to be able to retire until age 75.4,” Troise said. “Advisors have to engage [their clients] in a cash flow discussion. That’s the core, fundamental challenge facing every boomer today.”