Data & Research April 10, 2012

Boomers Lack Retirement Confidence

Few Baby Boomers are optimistic that their financial situation will improve during the next five years, as 62% believe it will be about the same or that it will deteriorate.
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A study from the Insured Retirement Institute (IRI) also found that confidence in retirement security is severely depressed, with only 36% of Boomers being confident in having enough assets to live comfortably during retirement. The confidence shortage was even higher among single and middle-income Boomers. Nearly three out of four single Boomers and 70% of middle-income Boomers are not confident in having enough money to live comfortably in retirement.  

The study also revealed that more Boomers are planning to work longer and into their retirement years. For 64% of Boomers, employment during retirement will be a source of income and nearly one-quarter do not expect to retire until at least age 70.  

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Employer-sponsored defined contribution plans are now on equal footing with Social Security as a major source of retirement income, according to the study. As additional evidence to the shift to defined contribution plans from traditional defined benefit pension plans, 42% of Boomers indicated that a defined benefit plan will not be an income source in retirement compared with 36% in a similar study in 2011.  

The study report is here. 

 

Data & Research April 10, 2012

Positive Outlook Key to Successful Retirement Planning

Confidence and a positive outlook are important to the success of an individual's retirement plan.
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Among the factors that determine success, “an individual’s outlook and confidence are probably most important,” said Richard Aneser, chief marketing officer at Lincoln Financial Distributors. Aneser spoke Monday during a panel discussion for National Retirement Planning Week. “People taking positive action” tend to feel more in control of their financial lives, yet fewer than half of all Baby Boomers have consulted a professional financial adviser, he said.

Referring to Lincoln’s 2011 MOOD of America Study (Measuring Optimism, Outlook and Direction), Aneser said, “Participants who are working with financial advisers tend to feel more in control of their lives.”  Lincoln found that most Americans (95%) who reported feeling in control of their lives also reported that they stay within a budget.

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Aneser added that market performance, accumulations and savings are critical to the success of an individual’s retirement plan. Market risk has a direct bearing on how a person accumulates assets and people may have to reset their expectations of how they define realistic savings – yet during a boom period when interest rates were low, “expectations were probably overstated,” he noted.

For the third straight year, affluent Americans said their greatest concern was the cost of health care. “The costs can be compelling,” Aneser said, but working with an adviser always helps make participants confident they can meet challenges and take advantage of opportunities realistically.

National Retirement Planning Week runs through Friday, April 13, and is led by the National Retirement Planning Coalition. This year’s focus is on Social Security and Baby Boomers’ retirement readiness.

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