Affluent Baby Boomers May be Overconfident with Retirement Planning
PHILADELPHIA -- When it comes to retirement planning, baby boomers may be painting an unrealistic expectation of how much they'll need to live on during their golden years, according to the third annual Lincoln Long Life survey released Nov. 1 by the Lincoln Retirement Institute.
Sixty-two percent of those surveyed expect to spend 20 or more years in retirement yet, approximately 17% speculate they will fall short or just meet their basic living expenses with their current resources. Moreover, 71% of boomers who plan to retire after age 60 are worried that Social Security benefits will not last, and 36% of respondents with pension plans are either very or somewhat concerned that their pensions will not deliver the expected amounts of retirement income.
Due to confidence in their planning skills, affluent boomers surveyed are optimistic about when they will be able to retire. Surprisingly, nearly six out of 10 respondents say they will retire before age 65, contradicting the popular notion that boomers will need to remain in the workforce longer than previous generations. In fact, age does not seem to make a difference when it comes to their expected retirement ages. More than half of both older boomers (over 50) and younger boomers (under 50) report planning to retire prior to the age of 65, before they will be eligible for Medicare or full Social Security benefits.
Many affluent boomers surveyed are in the caretaking business, and for this group, it is more about "giving" than "taking." Seventy-four percent report providing financial support to a child or parent and another 23%, who have at least one child and a living parent, epitomize the "sandwich generation" by providing monetary support to both. This financial strain is taking a toll on some boomers' retirement plans. Almost half of respondents with dependent adult children, 48%, say providing for family members makes it more difficult to save for retirement. In addition, one-fourth of these baby boomer caretakers have delayed their planned retirements by one year or longer as a result of providing financial support to family members.
"Two main factors contribute to this phenomenon of the sandwich generation. Many baby boomers had children later in life and continue to support them into young adulthood because of today's economy. Also, their parents are living longer due to advances in healthcare," said David Kittredge, spokesperson for the Lincoln Retirement Institute. "Unless boomers take their caretaking desires into account during retirement planning, we expect to see more and more of them feeling super squeezed by family obligations."
While 79% of affluent boomers say they feel prepared to deal with becoming seriously ill or disabled in the next 10 years, presently, 66% of respondents do not have long-term care insurance to help cover this type of expense. Of that group, only 26% have considered purchasing a policy. --email@example.com