Amid uncertain economic conditions, baby boomers aren’t feeling confident in their retirement plans. In fact, 70% of baby boomers expressed uncertainty over whether their retirement savings were healthy enough to carry them through retirement, according to a study from Retirement Living.
The study, which surveyed 758 American baby boomers aged 59 and older about their financial plans, found that the average retirement savings of respondents came out to a little over $680,000. However, the majority said they’d feel more secure about retiring comfortably if they had around $1.2 million in the bank.
Retirement Living also found that 69% of baby boomers are worried about a potential recession, and that because of this, 22% of baby boomers plan on delaying their retirement. Most are planning to stay in the workforce for another five years or more.
According to David Payne, Kiplinger’s staff economist: "The odds of a recession in the next 12 months are still 50%. The consumer expectations of future economic conditions are still poor. Businesses are likely to conserve cash and limit their spending for the rest of the year. Export markets figure to weaken. Government spending will continue, but no major new spending programs are on the horizon. In fact, any resolution of the debt limit issue could reduce federal spending, though likely by only a modest amount.”
Americans are already working longer to save for retirement than they once were; a Gallup poll from last year found that the age individuals expect to retire has risen 60 in 1995 to 66 in 2022.
Jeff Smith, senior content manager for Retirement Living, told Kiplinger, “In general, the average retirement age is increasing as life expectancy also rises. In addition to health factors, macroeconomic factors have made it more difficult to retire. For many workers, pensions and significant employer-backed programs are not an option for funding retirement."
Retirement Living found that 18% of boomers relied entirely on Social Security or government programs for retirement income, 36% relied heavily and 26% relied moderately. However, a study from Allianz Life Insurance Company of North America found that 74% of individuals claimed they cannot count on Social Security benefits when planning retirement income, and 88% said it was critical to have another source of guaranteed income beyond Social Security benefits in order to have a comfortable retirement.
While 78% of boomers reported that they weren’t going to let a potential recession delay their retirement, they're still taking other steps to prepare their retirement funds for a possible recession. For instance, one in eight boomers have downsized their homes, and 5% are drawing equity from their home in order to retire. Here’s how respondents are preparing their retirement funds, according to Retirement Living.
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Decreasing Spending
47%
Increasing savings
30%
Investing in "safe" assets
26%
Continuing to work full time
26%
Diversifying Investments
25%
Building up an emergency fund
23%
Applying to part-time jobs
20%
Applying to full-time jobs
4%
None of the above
11%
Smith also shared with Kiplinger tips boomers can take to bolster their retirement savings. “They should review and adjust their savings and investment plan to ensure it aligns with their financial goals and risk tolerance. This may involve consulting with a financial advisor to make informed decisions,” shares Smith.
In fact, the study found that nearly one in four boomers have discussed their retirement plans with a professional. Plus, over a quarter are bolstering their portfolios with "safe" assets. According to Smith, “Diversifying their investment portfolio to include 'safer' options can help protect their retirement savings while still allowing for potential growth."
Another way baby boomers can bolster their retirement savings is by cutting back on unnecessary expenses that can instead be used to save for retirement, which 47% are already doing.
A good first step to cutting back spending is by tracking where your money comes from and where it goes. Recording your expenses for a month or two will help you visualize where you could be spending less, and in turn, saving more. Canceling any unused subscriptions, finding cheaper ways to cool or heat your household and using the right cashback card are all ways you can save more. Try our household budget worksheet to get started.
Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.
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