Boomers with Pensions Still Face Uncertainty

While Baby Boomers participating in pension plans may feel more flexibility around their expected retirement date, nearly half still expect to retire with debt.

More working Baby Boomers with pensions indicate they are more likely (56%) to retire at or before the traditional age of 65 than those without pensions (39%), according to a Fidelity Investments survey. Forty-eight percent of all Boomers—regardless of whether they expect to retire with a pension—anticipate retiring with debt from some of life’s typical demands; primarily mortgage payments followed by credit cards, car payments and student loans of their own, of spouses or of children.  

Regardless of whether they have access to pension payments in retirement, seven in 10 retired boomers said they wished they had done more to save for retirement during their working years. One in five retirees with pensions acknowledged they did no planning before retirement, with half (51%) indicating they only began planning just a year or more before retirement.   

The majority (58%) of those surveyed said they were not familiar with the procedures and requirements involved in setting up pension payments upon retirement.  

As more companies are offering current and former employees participating in a pension plan a lump-sum distribution option in lieu of a future traditional annuity payout, the Fidelity study found 63% of employed Boomers would roll all of their pension assets into an individual retirement account (IRA) or 401(k) if given the choice or required to take a lump-sum. Sixteen percent would roll some of it into an IRA/401(k) and use some to purchase an annuity and just 6% would purchase an annuity with the entire amount.   

“What to do when offered a lump sum payout is a personal decision, making it critical that individuals seek help from a financial professional to fully understand their options and the potential impact on their overall financial plan,” said Ken Hevert, vice president at Fidelity Investments.   

The study was conducted among 1,018 Baby Boomers either working in or recently retired from corporate jobs.