Baby boomers won’t grow old the old-fashioned way, experts say.
It looks like the baby boomers, who used to urge each other to “do your own thing,” will do precisely that when it comes to retirement, write Tom Valeo and Sylvia Davis at WebMD.com.
Some will imitate their parents and drop out of the work force as early as possible to begin a life of leisure, continuing a trend that began more than a century ago.
More than 80% of boomers, however, plan to work beyond the age of 65, according to the Merrill Lynch New Retirement Survey. Most will do so to supplement their Social Security checks, since at least one-quarter of boomer households have failed to save enough for retirement, according to the Congressional Budget Office. “They appear likely to depend entirely on government benefits in retirement,” the CBO report states.
Here are some of the key findings from the Merrill Lynch report:
- The new retirement “turning point.” While 76% of boomers intend to keep working and earning in retirement, on average they expect to “retire” from their current job/career at around 64 and then launch into an entirely new job or career.
- Boomers reject a life of either full-time leisure or full-time work. When probed about their ideal work arrangement in retirement, the most common choice among boomers would be to repeatedly “cycle” between periods of work and leisure (42%); this was followed by a preference for working part-time (16%), starting their own business (13%), and working full-time (6%). Only 17% hope to never work for pay again.
- It’s not about the money. While 37% of the boomer generation indicate that continued earnings is a very important part of the reason they intend to keep working, 67% assert that continued mental stimulation and challenge is what will motivate them to stay in the game.
- The unpredictable cost of illness and healthcare is by far boomers’ biggest fear. They are three times more worried about a major illness (48%), their ability to pay for healthcare (53%), or winding up in a nursing home (48%), than about dying (17%).
- Boomer women are more financially engaged than in any generation in history. They are better educated, more independent, and simultaneously juggling more work and family responsibilities. Married boomer women are more than 6 times more likely to share responsibility for savings and investments compared to their mothers’ generation (33% now versus 5% then).
- Financial preparedness is the gateway to retirement freedom and the antidote to retirementphobia. Accumulating the resources boomers believe they need for retirement freedom (81%), rather than age (56%) or any other variable, was cited as the most decisive factor for when they choose to retire. And, recognizing the growing uncertainty of government entitlements, boomers who have a plan and feel prepared are twice as optimistic and far less fearful compared with those who do not.
- One size doesn’t fit all. When it comes to retirement dreams and preparedness, there are 5 distinct and different boomer segments: the “Empowered Trailblazers,” the “Wealth-Builders,” the “Leisure Lifers,” the “Anxious Idealists,” and the “Stretched and Stressed.” The survey revealed how each group is doing, their plans and ambitions for later life, their level of financial preparedness, and how they intend to fund their future dreams.