Baby Boomers’ Challenging Retirement Math

Posted on April 3, 2017

Baby Boomers’ Challenging Retirement Math
IRI Study on finds Boomers’ retirement expectations at odds with preparation, resources

WASHINGTON, DC –The Insured Retirement Institute (IRI) today released its latest report on the Baby Boomer generation’s expectations and readiness for retirement. Since IRI’s inaugural Baby Boomer report in 2011, the number of Americans over the age of 65 has risen over 18 percent. As they move into their pre-retirement and retirement years, most Boomers report insufficient retirement savings, and have not taken appropriate steps to plan effectively for their sunset years. Only 54 percent of Boomers have any retirement savings, and only four in 10 have tried to calculate how much they need to save to retire.

Unsurprisingly then, only 23 percent of Boomers believe that their savings will last throughout retirement, or that they have done a good job preparing for retirement. Paradoxically, however, six in 10 Boomers believe their retirement income will cover their basic expenses, with at least some leftover for travel and leisure activities. This disconnect between savings, confidence and expectations could result in many Boomers exhausting their financial resources during retirement.

Those among the Boomer population who work with financial professionals have a much brighter outlook. Eighty-five percent of Baby Boomers who work with financial advisors believe they are better prepared for retirement because of that relationship, and more than 90 percent of Baby Boomers who work with financial professionals have retirement savings. Further, 75 percent of those individuals have saved $100,000 or more, compared to less than one-half of those without financial advisors having savings at that level. 

“Baby Boomers are not taking full advantage of the resources available to help them achieve a secure and dignified retirement,” IRI President and CEO Cathy Weatherford said. “Retirement planning which focuses on holistic strategies, and considers retirement risks such as longevity, health care, long-term care, and lifestyle expectations, is the key to ensuring Boomers’ financial resources will provide income and security for their lifetimes. Financial professionals can help Boomers understand how to use a product they instinctively know they need, but for which they lack an understanding. The 2017 Boomer study reveals that 85 percent of Baby Boomers believe it is important to have a source of guaranteed lifetime income in addition to Social Security, but only eight percent would consider purchasing an annuity. Given that annuities are the only financial product that can provide guaranteed lifetime income, this is a clear knowledge gap that financial professionals can help bridge, increasing retirement security for millions of Americans.”

Key findings from the report include:

  • Only 54 percent of Boomers have retirement savings, the lowest recorded in the seven years of the Boomer report.
  • Almost one-third of Boomers think they will need an annual income between $45,000 and $75,000 during retirement, in today's dollars.
  • Six in 10 Boomers expect Social Security to be a major source of income, the highest recorded in the seven years of the Boomer report.
  • Only four in 10 Boomers have tried to calculate how much they need to save to retire, and of these only six in 10 included estimates of health care costs in their calculations.
  • Only 23 percent of Boomers believe they will have enough money to last throughout retirement, and that they have done a good job preparing for retirement.
  • Six in 10 Boomers believe their retirement income will be sufficient to cover basic expenses, and afford them at least some budget for travel and leisure.
  • More than eight in 10 Baby Boomers underestimate the percentage of their income which may be needed for health care costs.
  • Eighty-five percent say it is somewhat important or very important to have a source of guaranteed lifetime income other than Social Security, but only eight percent say they would purchase an annuity providing guaranteed lifetime income.

Boomer Expectations for Retirement 2017 is based on a survey of 800 Americans aged 54 to 70. Data is weighted by age and gender to the 2015 American Community Survey. Data was collected from January 25 through January 30, 2017. The margin of error for the sample of 800 was ± 3.5%. This report was released during a conference call marking the opening of National Retirement Planning Week (NRPW).  The NRPW annual campaign highlights national efforts to educate American consumers on comprehensive retirement planning.

About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is the leading association for the retirement income industry.  IRI proudly leads a national consumer coalition of more than 30 organizations, and is the only association that represents the entire supply chain of insured retirement strategies.  IRI members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals.  As a not-for-profit organization, IRI provides an objective forum for communication and education, and advocates for the sustainable retirement solutions Americans need to help achieve a secure and dignified retirement.  Learn more at www.irionline.org.

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For a PDF version of this release, click here.
Contact: John B Jennings