The articles seem to come out with depressing regularity, revealing the sobering truth: today’s boomer generation is woefully unprepared for retirement. This time here on the AgingOptions blog, we’re bringing two such articles to your attention, both based on data from a new financial industry survey. For those of you “with ears to hear,” we hope articles like these serve as a wake-up call, inspiring you to get serious about planning for retirement.
Boomers are Unprepared for a “Retirement Crisis”
Both these articles – this one from the CNBC website and also this one from Barron’s – are reporting on a newly-released annual survey from the Insured Retirement Institute, or IRI, a trade group representing the annuity industry. (You can access the entire 24-page report here.) It’s called “Boomer Expectations for Retirement,” with data derived from interviews with about 800 people between the ages of 56 and 72. CNBC says that there are presently more than 76 million boomers in the U.S. (those born between 1946 and 1964) and that just under half are already retired. How well have they prepared for what lies ahead? In short, the answer is “poorly.” The CNBC article summarizes this dire situation right there in the title: “Baby boomers face retirement crisis — little savings, high health costs and unrealistic expectations.” Ouch!
For many boomers, lack of financial preparedness lies at the center of the retirement crisis. According to the CNBC article, the three legs of the retirement stool are Social Security, private pensions and personal savings. When it comes to the baby boomers, CNBC writer Bob Pisani reports, “None is in great shape. The average Social Security check is $14,000 a year, hardly a cushy retirement. Only 23 percent of boomers ages 56-61 expect to receive income from a private company pension plan, and only 38 percent of older boomers expect a pension. As for personal savings, I’ll make it simple: Most boomers have not saved nearly enough.” The worst case scenario is pretty bleak: the Insured Retirement Institute reports that 45 percent of boomers have zero savings for retirement.
Boomers are Unprepared for Financial Realities
The IRI survey asked respondents what they would do if (or when) they ran out of money in retirement. The options were few. About 60 percent said they would downsize and get by on their Social Security alone. Just over one-third said they would go back to work. A much smaller number, about 6 percent, said that, if necessary, they would ask for assistance from their kids.
In an equally bleak summary of the bad news for boomers, the Barron’s article lists what the writer calls “The Seven Deadly Sins of Retirement Planning that Boomers Commit.” These include:
- Not saving enough (or anything).
- Draining retirement savings “either in desperation, carelessness, or maybe both.”
- Not calculating a retirement savings goal.
- Underestimating health costs.
- Ignoring long-term care costs. Just under half baby boomers surveyed by IRI believe that Medicare will pay for their long-term care. “Medicare doesn’t pay for long-term care. Not a nickel.” (CNBC reports that less than 10 percent of boomers own long-term care insurance.)
- Mishandling one’s planned retirement date. A large number of boomers are forced to retire earlier than planned, and another group has had to delay retirement due to lack of savings. Many boomers plan to work until 70 but few are able to do so.
- Not setting one’s affairs in order. “Possibly the most astonishing revelation in the survey,” Barron’s reports, is that “about two-thirds of boomers have taken no steps to protect themselves if they suffer diminished capacity or dementia. They haven’t spelled out their wishes for their care and end of life. They haven’t sorted out a power of attorney for when one is needed. And as anyone who has been through this process can tell you, the chances are pretty high that if you wait to do this stuff until it’s needed, it’s going to be too late.”
Many Boomers are Unprepared – but That’s Not the End of the Story
We can’t go back in time and change the choices we made decades ago. However, we can begin where we are and create a plan that will allow us to enjoy the best, most secure retirement possible. Here at AgingOptions we have helped thousands of retirees – and future retirees – overcome poor planning and get their retirement back on course, using an approach we call LifePlanning. Instead of placing all our attention on one single aspect of retirement, such as finances, in the LifePlanning process we work with you and your loved ones to create a retirement blueprint that encompasses all the key aspects of retirement: financial preparedness, legal affairs, medical protection, housing choices and family communication. A LifePlan from AgingOptions prepares you for what lies ahead in retirement, regardless of the size of your estate. There’s no other approach to retirement planning that’s quite like it.
We urge you to set aside your fears and your skepticism and invest just a few hours at a LifePlanning Seminar with Rajiv Nagaich. There’s absolutely no hard sell and no obligation – just an information-packed session that lets you decide if and when you want to take the next step. For a complete calendar of currently-scheduled seminars, visit our Live Events page and register there for the seminar of your choice, or contact us during the week. Many boomers are facing retirement unprepared, but you don’t have to! We’ll see you soon at a LifePlanning Seminar near you. Age on!