In fact, OppenheimerFunds said in a news release announcing its OppenheimerFunds Investing for Retirement Survey, boomers actually have different investment needs depending on their retirement savings profile. However, they share a common financial regret: they are uneasy about the extent to which they have saved for retirement.
“Most of the Boomers we talked to have mixed emotions when it comes to money, feeling both regret and contentment,” said Jim Ruff, President of OppenheimerFunds Distributor, in the news release. “Many feel they could have planned better and saved more responsibly, but did not for various reasons.”
The survey findings revealed that both workers and retirees are uncomfortable with how much they have accumulated during their pre-retirement years. Ninety-seven percent of workers surveyed say that they regret how they and their spouse spent their money considering how much more savings they could have accumulated.
OppenheimerFunds, Inc. and Matthew Greenwald & Associates identified four “retirement savings profiles” based on levels of confidence and preparedness among non-retired boomers, according to the news release:
- Smooth Sailors(Prepared and Unconcerned) 21% of non-retirees. This group is the most prepared of the four. They are the most likely to have an exact dollar amount in mind as their accumulation goal for retirement (50% do) or as their retirement income goal (42% do). They are more likely than the unprepared groups to have a written financial plan.
- Nervous Nellies(Prepared and Concerned) 27% of non-retirees This group of non-retirees has taken many steps to achieve a secure retirement and believe they are prepared, but are worried that events beyond their control might compromise their ability to attain financial security.
- Unrealistic Optimists(unprepared/unconcerned) 29% of non-retirees. These investors are not prepared yet are optimistic about their prospects for a comfortable retirement. Very few (15%) consider themselves very prepared for retirement and 72% say that, considering their age, they are only somewhat prepared for retirement.
- Pensive Procrastinators(Unprepared/Concerned) 23% of non-retirees. The pensive procrastinators have not planned well and are worried about it. They do not consider themselves well prepared for retirement and are concerned that they will be unable to save enough money for a secure retirement. Despite this, 76% of this group say they expect to live a comfortable retirement.
Many Boomers are unrealistic about the real cost of living in retirement and how their plans to exit the workforce will mesh with their savings plans. For example, Boomers underestimate the impact that debt will have on their retirement, especially as many expect to enter retirement owing more than previous generations.
Also, Boomers anticipate that they’ll have to work longer than their current retiree counterparts. When asked at what age they think they’ll retire, only a small portion of Boomers said before they reach 60. Yet over half of the retirees surveyed left the workforce before that age. Also, the majority of Boomers say they will continue to have some form of paid employment after they retire. On the contrary, a quarter of current retirees said they never had to work in retirement.
According to the survey, Boomers believe they will need to save less than ten times their current income for retirement, yet the average life expectancy in retirement is twenty years. Also, while they perceive that their expenses will decline once they stop working, almost 70% of retirees said they now spend the same or more as when they worked.
The nationwide survey examined the financial behaviors and attitudes of 1,000 retirees and pre-retirees, most of whom are baby boomers. The survey was conducted between September and October 2004 among Americans ages 45 to 75 with household incomes of at least $75,000 or household savings and investments of at least $300,000 (not including primary residence). Some 600 workers and 401 retirees were surveyed. The telephone interviewing was conducted by Matthew Greenwald & Associates.