Data & Research February 26, 2009

Neither Oldest nor Youngest Boomers Prepared for Retirement

A second look at the Baby Boomers who turned 62 last year and a new look at the younger Boomers, now turning 45, shows both are not saving as much as they'd like.
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Forty-six percent of the oldest group and 57% of those in the younger group are not saving as much as they had hoped, according to a survey from MetLife.

The study entitled, Boomer Bookends: Insights Into the Oldest and Youngest Boomers, shows that in the group born in 1946 (some 2.7 million Americans), about one in five have delayed collecting Social Security, and few have fully retired (19%). Only 13% have saved fully for their retirement and another 25% say they are on track to do so, with a leading concern being affordable health care, according to a press release of the results.

About two-thirds of the oldest Boomers remain in the workforce, 50% full-time. Almost six in 10 have provided financial assistance to their children and grandchildren. However, 24% said they have no concerns about retirement, across income levels.

Sandra Timmermann, director of the MetLife Mature Market Institute, noted that in comparing responses between the 2007 and 2008 among the ldest Boomers (see “Boomers Turning 62 Ready to Embrace Retirement“), they continue to rate their health as good, they have remained in their own homes, and they continue caring for their aging parents; however, only 15% of those who said in 2007 that they would retire in 2008, actually did.

Many in the youngest group (4.6 million people born in 1964) would rather be described as Generation X than Baby Boomer and say they will consider themselves “old” at age 71 (compared with age 78, cited by the older Boomers), the press release said. Though they will not be eligible for full Social Security until age 67, the younger Boomers are resisting delaying retirement and say they want to retire by age 64. However, they believe they will not be able to do so until age 65.

Only 36% of younger Boomers say their retirement savings plans are on schedule and a good deal express concern about outliving their money. They will not rely on defined benefit pensions for their retirement income like the oldest Boomers; they expect to depend largely on the funds in their 401(k)s, MetLife found.

Social Security is still seen as playing an important financial role for both groups.

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Data & Research February 26, 2009

African Americans Not Using Advisers

Nearly nine out of ten surveyed African Americans acknowledge they do not have a professional financial adviser, according to a survey by Nationwide.
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Why aren’t they using a financial adviser? They do not think they need one or think they cannot afford one. However, African American survey respondents showed a greater interest than the general population in obtaining financial planning information from seminars, a financial adviser, an insurance agent, family/friends, or television, Nationwide said (see “Blacks Say Advisers Could Help Contributions“).

Optimistic but Standing Still

The survey found African Americans are more positive than the general population about their financial future, but admittedly not taking steps to better their circumstances. The survey shows 58% of African Americans expect their household situation to be better a year from now, compared with only 30% of the general population, according to a press release of the results.

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Yet, less than half say they are proactive about their financial future: Three in four say they do not have a written financial plan, and one in three say they do not know where to start when it comes to personal financial planning.

The survey found African Americans are more confident than the general population in their ability to make savings and investment decisions (52% verse 43%), but are also more likely to indicate they are struggling with credit card debt (38% verse 32%), according to the release. Nearly half of all survey participants with children under 21 said they are very or extremely worried about being able to afford a college education for their children although only about 5% of all survey participants said they actually have a college savings plan, and only 3% cited saving for education as the most important goal.

African American respondents admitted more frequently to taking some type of action to avoid conversations about finances (45% verse 39% of the general population). Actions taken to avoid conversations included screening calls and cutting off a relationship.

However, of those who are not actively avoiding the topic, African Americans reported that they are talking to their children about financial matters. Three out of four parents with children under 21 said they have discussed saving money with their children, and three-fifths have done so within the past month. One in four have discussed saving money in the past six months.

However, of those participants with children in school, eight out of 10 acknowledge they have not researched if their school teaches about saving money.

The survey of 1,200 participants was commissioned by The Smiley Group and Nationwide Insurance.

 

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