Many baby boomers have expectations for their retirement years that their financial and employment circumstances don't support, nor does the experience of recent retirees. That's one of many conclusions from a recent study conducted by the Transamerica Center for Retirement Studies. It surveyed more than 4,000 workers age 50-plus and over 2,000 recent retirees, then compared the results to gain useful insights for boomers approaching retirement.
Here are some key findings from the survey of working boomers:
- Two-thirds (67 percent) plan to keep working past age 65 or don't plan to retire.
- More than one-third (39 percent) expect to earn income by working during retirement.
- The estimated median of reported total household retirement savings is $135,000, although a wide disparity was found between married ($177,000) and unmarried ($48,000) workers.
- Just 15 percent strongly agree that they've saved a large enough nest egg, and 33 percent somewhat agree that they've saved enough.
- More than one-third (35 percent) haven't made a retirement plan, and only 14 percent have a written plan.
For comparison, here's a snapshot of the same information for recent retirees:
- Almost two-thirds (61 percent) retired before age 65, and their median age at retirement was 62.
- Just 6 percent of retirees are actually earning income from working.
- The estimated median of total household retirement savings reported is $131,000. Again, there's a wide disparity between married ($225,000) and unmarried ($53,000) retirees.
- Only 16 percent strongly agree they've saved a large enough nest egg, and 30 percent somewhat agree that they've saved enough.
- Almost half (46 percent) haven't made a retirement plan, and just 10 percent have a written plan.
Current retirees are expecting a long retirement: 28 years is the median response. Almost half (41 percent) plan to be retired for three decades.
Here's the reality check: All these results just don't add up. The savings amounts reported aren't even close to being sufficient to finance 30-year-long retirements. Working longer is indeed a rational response to the reality of longer lives and insufficient retirement savings, and it's encouraging that so many boomers accept and plan to adopt that strategy.
But it's a plan that's easier said than done. And the experience of current retirees illustrates that it may be unrealistic to simply assume you can keep working indefinitely at your current rate of pay.
And finally, most successful retirements don't just happen by themselves. You'll need a plan, particularly if you expect a long retirement. To repeat the old adage: failing to plan is planning to fail.
The vision for retirement is one key difference between age 50-plus workers and current retirees. The former are much more likely than retirees (62 percent vs. 38 percent) to envision retirement as a period when you transition from working full time to working part time or working in a different capacity.
Stated another way, current retirees are more likely than age 50-plus workers (43 percent vs. 24 percent) to envision retirement as a one-time event in which you immediately stop working and begin pursuing retirement dreams.
One big challenge is that most employers aren't supporting the retirement vision of age 50-plus workers. Less than one out of four (23 percent) workers in that group report that their employer offers a transition from full-time to part-time work, and only 22 percent report the possibility for flexible working arrangements. Fewer than 20 percent are offered financial counseling, retirement seminars or other assistance programs.
Age 50-plus workers can also learn much from the regrets of current retirees, who report that they:
- Wish they had saved more (76 percent)
- Wish they had learned more about retirement saving and investing while they were working (68 percent)
- Would have liked to have received more information and advice from their employers about retirement planning (53 percent)
- Should have relied more on outside experts to manage their retirement savings (41 percent)
The Transamerica report makes familiar recommendations for both workers and retirees: Save more; reduce your debt; learn about Social Security; calculate your retirement needs and budget; take a good, hard look at your living expenses; make a plan; learn about saving and investing; and take steps to enable you to work longer.
Here's another recommendation: Since working is central to many workers' retirement plans, ask your current employer now about the possibility of shifting to part-time work later, and politely request supportive services such as financial counseling and retirement seminars. If enough of your colleagues make similar requests, enlightened employers will respond.
The bottom line? You'll greatly increase the odds of enjoying a lengthy retirement if you make a plan and take steps now to make your vision of retirement a reality.