Retirement: it’s not all scary

There’s no doubt Americans are concerned about retirement.

Many recent studies and statistics show a high level of fear and low level of preparedness for the future, which is something financial professionals have to take into account when helping clients plan for retirement.

The Employee Benefits Resource Institute’s 2011 Retirement Confidence Survey (RCS) noted that workers are more pessimistic than at any time in the two decades the RCS has been conducted. More than a quarter (27%) of workers now say they are “not at all confident” about retirement, up 5 percentage points from the level measured last year. Reinforcing that trend, the percentage of workers saying they are “very confident” they’ll have a comfortable retirement ties with 2009 at 13% — the lowest rate ever measured by the RCS.

This certainly relates to how boomers are feeling about their financial future. Allianz Life’s 2010 “Reclaiming the Future” study surveyed more than 3,200 people between the ages of 44 and 75 and found 61% said they feared outliving their money more than death.

Just as concerning, 35% felt financially unprepared for retirement, 36% had no idea if their income would last throughout retirement, and 44% said they were uncertain of when they could stop working. A recent refresh of the study from March of this year yielded nearly identical results to the same questions.

These are certainly compelling statistics — but is there more to the story that can help you make a better connection with boomer clients?

Believe it or not, there are other aspects of retirement that boomers feel strongly about, and it may be that these attitudes and opinions are more significant than the fear and worry that seem to permeate the conversation. These “Boomerisms” were explored extensively in the initial “Reclaiming the Future” study.

Focus on family and friends
Despite the negativity about retirement finances, boomers have a strong commitment to living well in retirement and enjoying time with family and friends. When asked about their top life goals for the next five to 10 years, boomers listed “staying healthy/getting in shape” as their top goal, followed by “spending time with family/friends.” “Traveling,” “being free of obligations” and “having lots of options” also ranked highly on the list.

Perhaps more telling was their response to the question about top financial goals. “Making as much money as possible” was on the list, but behind the top two goals: “making sure my significant other/spouse and kids are financially set” and “rebuilding my 401(k)/investment portfolio.” Thus, it’s clear that boomers are no longer focused on chasing big returns or living lavishly — they just want enough financial security in retirement to enjoy their families and make sure their loved ones are protected.

That doesn’t mean, however, that boomers believe in leaving large sums to their children at the expense of their retirement lifestyle. In fact, 78% believe their generation has overindulged its kids, and 51% think it’s finally time to cut their kids loose and focus on their own financial health. Furthermore, 71% believe they have a right to a comfortable retirement, even if it means they leave less to the kids.

American Dream still a priority
This attitude is no doubt informed by the boomer generation’s overall belief in the American Dream. Nearly half of the respondents (44%) said they identified with the concept that if you work hard you can achieve the American Dream. And for boomers, the American Dream also includes the traditional desire to live better than ones’ parents. More than three-quarters of boomers (79%) said they believe their generation wants to live “much better in retirement than our parents.”

It’s these feelings of independence and self-directedness that seem to be the most important aspects of boomers’ decision-making process. Although they are worried about their financial future, they have an unmistakable drive to control their own destiny and a commitment to responsibility that puts their larger life goals into greater focus.

According to the study, 85% believe that financial security is “something you control versus something that is outside of your control.” And 80% believe financial independence is “the right of every American versus something that is just for some people.” Even more pronounced, a whopping 91% of boomers feel their generation should fix Social Security versus leaving it for future generations.

It’s logical to assume that, given this belief in the rewards of hard work, independence and charting your own course for retirement, a majority of people would prefer to leave the job force after retirement. Just the opposite is true, as a significant majority (68%) said they plan to keep working after retirement age. Among those, nearly half (49%) plan to continue doing the work they do today.

Focus on the positives
Thus, while fear and worry get all of the headlines, many boomers aren’t dwelling on the negatives. In fact, their strong sense of responsibility and their desire to live well in retirement are also driving factors in how they handle their finances — and it’s this last point that is especially important.

“Living well” doesn’t mean fancy cars and expensive vacations. For the majority of boomers, it simply means having enough to live comfortably. Their true priorities revolve around spending time with family and friends, so the chief purpose of their retirement nest egg is to help them achieve those goals.

Even if they came into a sudden substantial cash windfall, boomers aren’t very interested in a nice vacation (6%) or splurging on themselves (1%). The vast majority (33%) said they would acquire or work with their current financial professional to apply it toward their retirement nest egg.

So while it’s certainly important to listen to your boomer clients’ concerns, if you dig a little deeper, you may be able to uncover a different set of attitudes and opinions that matter just as much when helping them plan for the future.


Katie Libbe, M.B.A., is vice president of consumer marketing and solutions for Allianz Life.


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