A report released by the Insured Retirement Institute (IRI), “The Great Divide: Financial Comparison of Early and Late Boomers’ Retirement Preparedness,” shows those on the tail end of the Boomer category will be confronted with added challenges and are less prepared financially to overcome them.
The report found that while the percentage of all Boomers who are confident they have sufficient funds to cover their retirement years sunk to 34% in 2013, results varied within the broader group. Early Boomers, ages 61 to 66, were slightly more optimistic, with 42% believing they have enough savings to live comfortably throughout retirement. But for late Boomers, ages 50 to 55, only 25% shared this confidence.
Other findings from the report include:
- While savings are lagging for both groups, 47% of late Boomers reported having less than $100,000 saved for retirement, compared with 32% of early Boomers;
- Forty-three percent of late Boomers identified a DC plan as a major source of retirement income, compared with 36% of early Boomers;
- Insufficient savings is the most common reason late Boomers are uncertain as to when they will retire, as stated by 27% of those surveyed. By contrast, the most common reason for the uncertainty among early Boomers, as stated by 20%, is that they enjoy working;
- Of late Boomers, 31% are struggling to pay their rent or mortgage, and 34% are financially supporting an adult child, compared with 20% and 21%, respectively, of early Boomers; and
- More late Boomers remain in the labor force, 80%, compared with only 43% of early Boomers.
"From a retirement planning perspective, we need to start segmenting the Boomer cohort to ensure that we are appropriately addressing their unique retirement needs and challenges," said Cathy Weatherford, IRI president and CEO. "Those on the back end of the generation have had a much different workplace experience than the first Boomers. They worked most their careers during the defined contribution (DC) plan era and will face many of the risks and challenges that have come with it."
As a result, Weatherford said, they will be more self-responsible for their retirement income security. At the same time, however, late Boomers have less saved for retirement and their low confidence regarding their future financial security reflects this.
Woelfel Research, Inc. surveyed, on behalf of IRI, individuals who are approaching retirement or who have recently retired. Telephone interviews were conducted with 802 adult Americans, ages 50 to 66. The full report can be downloaded here.