How ‘New Frugality’ Influences Boomers’ Rising Retirement Optimism

Baby boomers today are feeling financially prepared for retirement, Allianz Life reported Monday.

Not only that, more boomers think they can determine their post-work expenses and have the tools to figure out the retirement puzzle.

A report early in the summer said American workers’ readiness for retirement compared favorably with that of foreign peers.

Allianz Life acknowledged in a statement that 63% of Americans fear running out of money in retirement more than they fear death, but said its research showed that boomers were exhibiting a new optimism.

Other recent research found that middle-income boomers were unsure about their prospects for a secure retirement.

Larson Research + Strategy conducted the online survey in May with 3,006 U.S. adults ages 20 to 70 with a minimum household income of $30,000.

Seventy-two percent of boomers in the poll said they felt financially prepared for retirement, up from 58% who said this in 2010.

In addition, only 32% of boomers said uncertainty about their financial future made it hard to know when they could stop working, compared with 50% who said they were unsure about when they could retire, if ever, in 2010.

Other positive indicators: Half of boomer respondents considered it “impossible” to determine retirement expenses, down from 60% in a 2014 study, and 36% thought they lacked know-how to figure out the retirement puzzle, down from 46% in the same study.

“The Generations Ahead Study highlights encouraging news for boomers and proves that with proper focus and engagement, anyone can turn around a poor savings situation and start building for a successful retirement,” Paul Kelash, vice president of consumer insights for Allianz Life, said in the statement.

“Whether taking lessons from the past or forging a new path, the key for each generation is to recognize that a solid retirement plan doesn’t happen by chance, but rather with a clear process and defined actions.”

What’s leading to boomers’ stronger sense of financial preparedness and confidence?

A new frugality has taken hold, according to the study. Sixty-four percent of respondents said they were “savers” rather than “spenders,” and 61% said they knew precisely how much money was in their accounts.

A quarter of these thriftier boomers described themselves as “penny pinchers.”

As a result, more boomers are thinking seriously about saving for retirement, the study found. Sixty-five percent said they considered it a basic necessity, like food or housing. This compared with 58% of millennial respondents and 53% of Gen Xers.

Boomers’ new frugal mindset has helped bolster their bottom line, according to the study. Boomers have the highest median amount in retirement savings among all generations at $175,000.

A third of boomers reported that they had $250,000 or more earmarked for their retirement years.

Allianz Life noted that boomers’ optimism about retirement has implications for the advisor-client relationship.