Baby Boomers are faced with a number of financial barriers, including lower investable assets and the increasing cost of health care, that are delaying retirement. Of those still working, more expect to retire after age 65 (43%) than before (16%), with just two in 10 (19%) expecting to retire at age 65. Many are concerned about meeting their financial needs in retirement as just one-third (38%) feel very or extremely confident about their retirement savings, two-thirds (62%) express some doubts, and a quarter (25%) are not too confident or not confident at all.
The results are from a study commissioned by the Bankers Life Center for a Secure Retirement (CSR), which also reveals 66% of those with investable assets between $500,000 and $1 million, and 86% of those with investable assets greater than $1 million, are very confident their money will last throughout their retirement.
While Boomers express optimism, most have not achieved this level of asset attainment. Only 13% have investable assets of $500,000 or more, 54% have less than $100,000, and 34% have less than $25,000. Lower investable assets may be explained by Boomers investing heavily in their homes. The results reveal the median investable assets range is from $25,000 to $100,000, however the median equity value is $100,000 to $250,000.
“Boomers are facing a challenging retirement environment, but just about any of them can improve their financial security through a combination of investment and protection products,” says Scott Goldberg, president of Bankers Life. “A professional adviser can play an important role in repositioning assets for future income and reducing the risk of financial disruption throughout retirement.”
Health care expenses are a growing concern, as well. The life expectancy of a 65-year-old has increased by 37% since 1950, according to the National Center for Health Statistics. Middle-income Boomers estimated the cost of one year of nursing home care at $46,890, yet the true cost is nearly double that, averaging $90,520, according to a 2013 CSR survey. With median investable assets of $25,000 to $100,000, one year in a nursing home could virtually consume the entire savings of many Boomers.
Additionally, Boomers are unprepared for managing major changes in their health. Sixty-five percent do not have a current health care power of attorney, 64% lack an up-to-date living will, and 63% do not have a current last will and testament.
The “Middle-Income Boomer Retirement Gap: Savings, Education and Advice” study was conducted in July 2014 and compiles a survey of 1,000 Americans ages 50 to 68 with an annual household income between $25,000 and $100,000.
The study is available here.