Even though they don’t really believe it will be there to provide them benefits throughouttheir retirement, many baby boomers are looking to Social Security to provide a major part of post-retirement income and have failed to save or plan adequately for a jobless future.
The latest MFS Investing Sentiment Survey, released Monday, indicated that over a third of boomers expect that Social Security will be “a major source of income during retirement.” However, only 25% believe that the system will be able to provide those benefits throughout their retirement, and 40% indicated that they were not at all confident that the money would be there.
So how do boomers plan to accommodate a lack of reliable benefits? Not, as you might expect, by saving more or by taking more risk in investments in the hope of a higher return, but by cutting back on spending, working part-time during retirement, and/or by postponing retirement.
Although most investors acknowledge the importance of savings and investments in paying for their retirement years, giving such funds top place among the means to fund retirement, boomers have not saved very much toward that goal. Among respondents with a median of eight years till retirement, only 12% had socked away $1 million or more in retirement accounts. The median savings level was far lower, at $314,000.