Confidence is alive and well among Baby Boomers regarding their retirement, impervious even to pandemic and economic turbulence, says a recent study.
A strong majority—84% of those who are close to retiring or who have already—in Charles Schwab’s 2020 Modern Retirement Survey said they believe that their retirement will be better than their parents’ retirement. Further, 82% said that they expect their retirement savings will enable them to be largely successful in achieving the lifestyle they planned in retirement. The survey was conducted among 2,000 Americans age 55-75 with at least $100,000 in investable assets.
Rob Williams, Vice President of Financial Planning and Retirement Income at Charles Schwab, rained on the Boomer parade a bit. He warned in a press release that survey respondents’ average retirement savings of $920,400 would last seven years at the rate of spending the respondents in that age group expected to have. However, Williams also noted that they may have additional sources of income during retirement, such as Social Security. And he suggested that they should have a plan for financing their retirement in writing.
There were some variations among the Boomers themselves in confidence and expectations regarding savings and lifestyle during retirement, researchers found. Confidence was highest among those who had been retired for at least five years and lowest among those who had not yet retired that they would not work part-time during retirement; still, two-thirds of those approaching retirement did not expect to. Similarly, the percentage of those who had been retired five years or more who reported that the pandemic affected them financially was very low; many more of the Boomers who had not yet retired experienced such an effect, but still it was far from a majority, at only 31% of that sub-group.
The Boomers’ optimism did not extend to their expectations for other generations. Eighty percent of Charles Schwab’s respondents said they expected that their children would not have as good a quality of life during retirement as they do. TIAA also reports a similar finding in its recent study of adults and financial security, with a majority of those in its study saying that they are “falling behind” in saving for retirement.
Effects of the Pandemic
The heightened experience of financial effects that younger, employed Boomers expressed is even more pronounced among adults in general, according to TIAA. It reports that in a recent study, it found that almost 60% of adults said they experienced financial stress due to the pandemic. Furthermore, many of those in TIAA’s study who say that they are not saving as well as they would like for retirement attribute that to the pandemic. And TIAA says that the pandemic has changed almost 80% of Americans’ views about financial priorities.
Both studies show that one of the financial effects of the pandemic is to increase interest in not only setting up an emergency fund, but also actually doing so. Almost a quarter of the Boomers Charles Schwab studied said so. TIAA reported much more dramatic results in that regard: before the COVID outbreak, 69% of their respondents had such a fund; now, says TIAA, 77% do.
And researchers from both also found that the pandemic evoked fresh consideration of finances and strategy. Charles Schwab listed calculation of the amount needed for retirement, updating retirement plans and contacting a financial advisor among the steps that Boomers have been taking; TIAA reports very strong interest in guaranteed lifetime income; they also report interest in increasing retirement savings and paying down debt.
