1946 was the first year of the Baby Boomer generation. Many famous people were born that year - Bill Clinton, George W. Bush, Dolly Parton, Linda Ronstadt, Tommy Lee Jones, Sally Field, Steven Spielberg, and many others. Most or all of these people are undoubtedly in good financial shape, but how are the rest of the individuals in this group doing when it comes to retirement? The MetLife Mature Market Institute (MMI) released a follow-up to an earlier study to assess this narrow segment.
The MMI found that more than half (52%) of 1946 Boomers are now fully retired. Depending on where on the calendar their birthdays fall, these individuals are now 66 or 67 years old. This is up from 45% in 2011 and 19% in 2007. Currently, 86% are collecting Social Security, and of this subgroup, 43% started earlier than expected. While most of these retirees are empty nesters, about one in eight are caring for an older parent or relative.
For those born in 1946, they define "old" as age 78.5. Interestingly, The Center for Disease Control (CDC) reports U.S. life expectancy at 78.7.
Of those who are fully retired, the primary reason for doing so earlier than expected was health (32%) and job loss (25%). Others retired later than expected, primarily due to various financial considerations: needed salary (30%), needed to save more (13%), needed to recover or rebuild finances (4%), and needed company-provided health benefits (4%). About one in four simply wanted to keep working because they enjoyed it or preferred staying active (26%). (The study notes that this latter group is based on a small sample.)
Even though the sample might be small, the data about those who retired later than expected is directionally interesting. The earlier Boomers are thought to be doing better financially than later Boomers, yet about half of those who retired later than expected are struggling with their finances. This writer would suggest that helping individuals solve their never-ending financial balancing act would be an important goal, and perhaps an opportunity, for those companies and individuals with expertise in that area.
Pausing to get back on right road to retirement
Last week, we noted that the retirement glass was half-full, as assets were reported to be at an all-time high. This week, a new report provides more of a half-empty perspective, particularly for the latter part of the Baby Boomer population and for Generation X.
According to the Pew Research study, Retirement Security Across Generations: Are Americans Prepared for their Golden Years?, those Boomers born between 1946 and 1955 are in better financial shape than are Boomers born between 1956 and 1965 (other research uses 1964 as the end date of the Boomer years). Gen X members - that is, those born between 1966 and 1975 - have higher net worth than late Boomers, but both groups trail the early Boomer segment. Early Boomers had more wealth in their 40's and 50's than did late Boomers, but both groups trailed those born between 1936 and 1945 (i.e., war babies) during the same time frame.
The assets of war babies were reported at a level 27 times greater than their debt. By contrast, Baby Boomers were at an asset level 4 times greater than debt. Gen X was the hardest hit by the 2008 recession, with an asset level only 2 times greater than debt. Boomers lost just over a quarter of their net worth during the Great Recession, but Gen X was even harder hit, losing an astonishing 45%. Pew predicts that late Boomers will only be able to replace 60% of preretirement income. For Gen X, the figure is even more worrisome, as this segment will only be able to replace about half of preretirement income. As the study puts it, "Early boomers may be the last cohort on track to retire with enough savings and assets to maintain their financial security through their golden years. "
In the land of Pike's Peak
According to the 2013 Fact Book from the Investment Company Institute (IC), retirement assets have rebounded all the way from the economic downturn half a decade ago and are back at all-time highs. In 2007, retirement assets stood at $17.9 trillion. The following year, assets dropped to $14.2 trillion. As of the end of 2012, retirement assets climbed back all the way to $19.5 trillion. IRAs grew to $5.4 trillion, with rollovers comprising the lion's share of assets. DC plans also stood out, with $5.1 trillion through 2012. There is an additional $9.0 trillion in retirement assets, including $2.6 trillion in private sector DB funds. The complete Fact Book is available on ICI's website.
Pedestrian crossing - Florida-style
Merrill Lynch has teamed up with Age Wave to examine what is on the minds of those approaching and those in retirement. According to the study, Americans' Perspectives on New Retirement Realities and the Longevity Bonus, as individuals live longer, they are reinventing retirement and fulfilling dreams that were delayed during their working years. Retirees are staying stimulated through social networks. Happiness in retirement is defined less in terms of money and more in terms of "new experiences, peace of mind, helping family and making a difference."
Among the leading concerns for those surveyed are the following:
The report is very instructive because it takes a big picture view of retirement. Saving for retirement is an important goal, but it is helpful to understand the challenges that individuals face and will face in the years ahead.
Blog Author - Ken Felsher
With over 25 years of writing, editing, and research experience. I enjoy sharing with my readers my love of working with content on a variety of subjects.
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