According to findings from a report by the Insured Retirement Institute (IRI) “the continuing slow recovery from the economic recession is having a prolonged effect on boomer confidence levels.” In addition to the economy, boomers “will be the first generation in which defined contribution plans are a major source of retirement income.” The challenge posed by this shift toward defined contribution plans means that boomers have much more personal responsibility in managing the assets, accumulated during a lifetime, for their retirement.
The report also looked at how boomers are faring with and without a financial advisor.
Key observations from the study:
- Boomer confidence in doing a good job preparing financially for retirement declined seven percentage points from 44 percent in 2011 to 37 percent in 2013.
- 48 percent of boomers who work with an advisor were extremely or very confident with their financial preparations for retirement compared with 28 percent who do not work with an advisor.
- 94 percent of boomers who work with an advisor have savings for retirement compared with 64 percent who do not work with an advisor.
- 24 percent of boomers have trouble paying the mortgage/rent.
- 22 percent of working boomers have stopped contributing to a retirement savings plan.
- 21 percent of boomers have postponed their plans to retire.
- Boomers have competing financial demands, beyond saving for retirement. The costs of college education for their children and caring for aging parents are also important considerations.
- 69 percent of boomers are not confident they will have enough money to pay for their children’s college education.
- 75 percent of boomers are not confident they will have enough money to pay the long- term care expenses of their parents.
- 79 percent of working boomers stated employment in retirement will be a source of income, an increase of 12 percentage points from the 2011 survey.
- Among boomers who have decided on an age to retire, the trend over the past three years is planning on retiring at later ages. In 2011, 11 percent of boomers stated they were planning on retiring at age 70 or later. By 2013, this increased to 18 percent.
- Of those boomers who do not know at what age they will retire, the most common reason given was insufficient savings, stated by one quarter of respondents in 2013.
- Retired boomers have higher levels of confidence in meeting their financial needs in retirement. This is attributed, in part, to different retirement income sources for retired boomers compared to working boomers, who will more likely need an alternative source of lifetime income.
- 48 percent of retired boomers state a traditional defined benefit pension plan is a major source of income in retirement, and 34 percent state a defined contribution plan is a major source.
- 38 percent of working boomers expect a traditional defined benefit pension plan to be a major source of income in retirement, and 45 percent expect a defined contribution plan will be a major source.
For more coverage from our 2013 boomer survey, visit www.LifeHealthPro.com/BoomerSurvey.