Most Baby Boomers prefer peace of mind over wealth accumulation and are looking to reinvent themselves in retirement, according a Merrill Lynch study released Monday.
The study found that today retirees expect to live longer and often work longer than any earlier generation, and are looking for guidance in what is uncharted territory.
Completed in January, the study is based on a nationwide survey of more than 6,300 respondents age 45 and older. These included 3,002 responses from the general population, an oversampling of an additional 3,005 affluent respondents with $250,000 to $3 million in investable assets (including liquid cash and investments, but excluding real estate) and an oversampling of 320 60- to 70-year-olds.
The report, titled “Americans’ Perspectives on New Retirement Realities and the Longevity Bonus,” focused on people’s approaches to and thoughts about retirement.
‘Longevity Bonus’ and Its Implications
Today’s retirees are largely not retiring, the survey found. Thirty-nine percent expected to include part-time work in their retirement years, and 24% to mix stretches of work with periods of leisure.
Forty-eight percent said they would work in retirement for “stimulation and satisfaction,” rising to 68% for affluent respondents, versus 52% who needed money.
Moreover, 57% of Americans 45 and older looked at retirement as a new chapter in life, with 51% of preretirees who planned to work in retirement saying they wanted to go into a different line of work altogether.
Another key finding was the potential financial effect of supporting family members across multiple generations. Of the 74% of respondents with children, 52% expected to provide their adult children with some form of ongoing support. Thirty-five percent of respondents expected to give some support to their grandchildren, 16% to a parent or parent-in-law and 10% to a sibling or sibling-in-law.
One unexpected finding emerged from a question about what retirees expected to miss most when leaving work and what they actually miss most. Thirty-eight percent expected to miss reliable income, while 17% thought they would miss social connections. In the event, 34% reported that they most missed social connections, followed by 29% who missed a reliable income.
Asked what was important to pass on to future generations, 74% of respondents said their top priorities were values and life lessons. Passing on financial and real estate assets was a priority for 32%.
“Boomers have always paved their own way, and are once again pioneering new territory,” Andy Sieg, head of Global Wealth and Retirement Solutions for Bank of America Merrill Lynch, said in a statement.
“Their perspectives, concerns, goals and how they plan to achieve them are different.”
Concerns and Need for Guidance
Serious health problems were the chief concern of 72% of respondents, far outweighing the 60% who did not want to be a burden on their family, and 47% who worried about running out of money to live comfortably. Along with this, health care expenses were the No. 1 financial worry for retirement for 52% of respondents with investable assets above $250,000 and 37% of less affluent respondents.
A popular notion has it that people today are delaying retirement. In fact, the survey found that 59% of men and 57% of women had retired early.
For 34% of early retirees, the main reason was a personal health problem. Twenty-seven percent retired early because they had enough money to retire, and 24% had lost their job.
With only a third of large companies offering health benefits to retirees today, versus two-thirds 25 years ago, retirees are looking for advice about how to protect against retirement health care costs.
Seventy-five percent of respondents said they needed help in sorting through health care and long-term care options. Close behind, 71% wanted help to understand Social Security or employer pensions.
“Americans have mixed feelings about living longer and transitioning into retirement,” Ken Dychtwald, founder and chief executive of Age Wave, said in the statement.
“While they welcome the extra time to pursue new interests and spend more time with family and friends, they are concerned about outliving their assets and experiencing a serious health disruption. Even those who have saved adequately can be anxious and often overwhelmed by this complexity and the unknowns they face.”
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