Outliving Savings Feared More Than Death

Nearly two-thirds of Baby Boomers fear outliving their money in retirement more than death, according to a new survey.

The study, “Reclaiming the Future: Challenging Retirement Income Perceptions,” by Allianz Life Insurance Company of North America (Allianz Life). titled, indicated that 61% of those Boomers were more anxious about outliving their savings, but nearly one third (31%) of those respondents say they are not too clear about what their expenses will be in retirement.  Not surprisingly, 36% have no idea if their income will last.

A majority of respondents feel their retirement lifestyle must surpass their parents (79%), which Allianz said indicated a need to focus on income in retirement versus accumulation of assets. When asked how much yearly income is needed in retirement, respondents indicated a median income of $59,000 per year, but Allianz noted that Boomers were off by a factor of nearly three times too small when estimating how much they’d need to save to create that household income.

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In fact, asked which they were more likely to guess correctly, exactly how much money they’ll have (or need) at the point of retirement or how many gumballs are in the jar at the local county fair, just over half 53% felt confident in their ability to gauge their retirement income needs – only six percent higher than those more certain of their gumball guessing skills.

The study, titled Reclaiming the Future: Challenging Retirement Income Perceptions, was conducted in May 2010 with more than 3,200 Baby Boomers ranging in age from 44 to 75.

Larson Research and Strategy Consulting, Inc. and DSS Research fielded a nationwide online survey for Allianz Life among 3,257 U.S. adults, age 44 to 75. The margin of error for the total sample was approximately +/- 1.7%. The online survey was conducted in the United States between May 6th, 2010 and May 12th, 2010.  In addition to a representative sample of 1,642 US households, subsamples of more affluent households and households who own annuities were also targeted. Results were weighted by age, gender, education, race/ethnicity and income to account for disproportionate sampling of certain populations.

Schwab Campaign Reaches Out to Gen Y

Charles Schwab has announced a new educational campaign to help young adults facing “financial firsts” as they graduate, start working and begin living on their own.

According to a press release, the campaign will be delivered through Schwab’s educational website, www.SchwabMoneyWise.com, and via Twitter.

A new hub on schwabmoneywise.com now addresses the specific financial challenges facing young people in their 20s who are just starting out. In addition, a Financial Fitness Quiz provides a way to begin, with a diagnostic tool that not only allows people to see how financially fit they are based on routine behaviors, but also shows them how they compare to other people their age and offers them valuable next steps.

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The website enhancements follow Schwab’s 2010 Families & Money Survey, released in April, which revealed that young adults today are reaching financial independence much later than in previous generations.

“We can no longer simply talk at this generation,” said Carrie Schwab-Pomerantz, president of Charles Schwab Foundation. “Social media isn’t just a place where young adults spend their time, but it’s also a place that allows for a two-way conversation. Through @schwabmoneywise on Twitter, our hope is to better understand the struggles this generation faces.”

Money Mondays’ weekly financial tips will be tweeted from @schwabmoneywise and posted on the SchwabMoneyWise.com website along with links to relevant tools, resources and information. By following along, one simple step at a time, young people can begin to develop sound habits that will put them in control of their own money—not just by helping them live within their means but also by helping them begin to save for the future, according to the press release.

Beyond the financial fitness quiz, weekly tips and bi-monthly contests, the website provides deeper information to answer young people’s money questions. A  new Starting Out section within the Life Events tab covers many money-related basics—like how to file taxes, find the right health insurance and secure a good auto loan—and connects young people with useful tools and calculators to help with budgeting, saving and paying off debt.

Specifically, the new section now includes resources on the following:

  • Good debt vs. bad debt and a focused discussion on paying off student loans
  • Making the most of your paycheck and learning to live within your means
  • Setting yourself up for success and organizing your financial life
  • Making saving easy
  • Important financial firsts including cars, leases, taxes and savings
  • Insurance you need – and don’t
  • Love & money: deciding what happens when you marry

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