Half of the baby boomers polled by ING said they feel comfortable and under control regarding their financial preparations for retirement, with 55% giving themselves an “A” or “B” grade on their preparation. However, a disconnect was found when asked how long they could go during an emergency before tapping into their long-term savings – the same half would not be able to last more than six months.
This trend diverged even further at the gender fork in the road. Overall, women respondents feel much less confident about their retirement planning than men (43% versus 58%), and more women than men believe they will be worse off in retirement than they are now (25% versus 10%). Additionally, men on average are spending more time per month on financial planning than women (4 hours versus 2.5 hours).
The same trend of dipping into retirement savings and a lack of preparedness was seen elsewhere in the Boomers Still on the Brink survey. Of respondents who have changed jobs, 22% cashed out their retirement plans, a major no-no when it comes to long-term retirement savings. Further, nearly two-thirds (62%) are currently spending less than an hour per month on retirement savings, with 32% not spending any time at all with retirement planning issues.
Seeing The Light
It is not that the baby boomer population is oblivious to the situation, with many seeing the light at the end of the tunnel growing dimmer and dimmer. R espondents said they expect to be financially secure enough to retire when they are 62, which is almost seven years longer than they would like to be working. Comparatively, in 2001, boomers expected to be able to retire by age 60, just four years more than they would like.
When the day does come, more than half (56%) of those surveyed believe they will be in about the same financial situation as they are now. Otherwise:
- 23% – think they will be financially better off than they are now
- 18% – think they will be worse off then they are now.
By comparison, in 2001, more than half (52%) said they would be about the same; however, more were optimistic about being better off in retirement (30%) and fewer felt they would be worse off (14%).
To help them achieve this goal most would prefer to consult a professional financial advisor (74%) for reliable advice and information on retirement planning decisions more than consult anyone else. Friends and relatives (56%) were the next most sought consultants, and accountants (52%) rounded out the top three. However, the disconnect was found again between doing what they say, not what they do, as only two-thirds (66%) have actually consulted a professional for advice.
Not surprisingly, younger respondents (ages 35 to 44) are significantly more confident than older boomers that they will be better off in retirement (32% versus 14%), they are less likely to seek financial advice from professionals (65% versus 47%) and are more likely to state they “live beyond their means” (32% versus 17%).
However all hope is not lost. The vast majority (83%) said they have an employer-sponsored retirement plan, while nearly half have an IRA (46%). Additionally, more than half of respondents (54%) said they are relying on their employer-sponsored plan as their largest source of retirement income and a majority (47%) “stayed the course” and contributed the same or more to their employer-sponsored retirement plan over the past two years. The remaining boomers increased their contributions (35%), decreased them (5%) or cashed out (3%).
Further, a sense of cautious optimism was in the air on predictions for the stock market for the next year:
- 46% – foresee a slight increase
- 30% – predict stabilization
- 9% – anticipate a slight decrease
- 5% – forecast a dramatic increase
- 3% – see a dramatic decrease.
The “Boomers Still on the Brink” survey was conducted in July 2003 by the research firm, KRC Research. The survey of 500 respondents included people ages 35 through 55 with annual household incomes between $50,000 and $125,000.