More than half (55 percent) of surveyed Americans born between 1954 and 1964, i.e. “Baby Boomers,” said that the overall satisfaction they feel regarding their financial lives improved in 2018, according to an updated report from the Insured Retirement Institute (IRI). That is the second annual increase in a row and a welcome turnaround following the 43 percent cycle low seen in the 2016 survey.
The sharp rebound in financial satisfaction is due in part to fewer reports from Boomers of suspended retirement account contributions, early withdrawals from 401(k)s and IRAs, and difficulties covering mortgage and rent payments. A majority (57 percent) of respondents also said that they typically carry less than $1,000 in credit card debt, but there is still a lot of room left for improvement. For example, two out of every three surveyed Boomers said that they have $5,000 or less in emergency savings, including 45 percent that have $1,000 or less. That lack of a short-term backstop means that many Boomers are ill-prepared for an unexpected medical expense, home repair, or other sudden financial shock, and therefore could be forced to dip into their long-term savings should the need arise.
Moreover, respondents’ reported levels of confidence in their readiness for retirement improved across the board in 2018, but overall the figures still suggest that many Boomers have doubts about how financially prepared they are for old age. Only a quarter of respondents, for instance, said that they believe they will not run out of money in retirement, and just 36 percent expect to be more financially secure in old age than their parents. A big issue weighing on retirement confidence is the cost of care, as just 29 percent of surveyed Boomers said that they anticipate having enough money to cover all their healthcare expenses in old age, and only 19 percent believe they will be able to afford long-term care.
One thing that appears able to help is working with a professional financial advisor. Indeed, among all the surveyed Boomers with retirement savings, 62 percent have set aside $100,000 or more. However, 79 percent of Boomers that consulted with an advisor were able to amass such a nest egg, while only 48 percent were equally successful on their own. That is not too surprising since most of the surveyed Boomers that consulted with a financial professional reported that they have discussed in depth with their advisor retirement, investing, old-age budgeting, insurance needs, and tax and estate planning. Nine in ten Boomers who worked with a financial professional could also confidently say that they believe their advisor works in their best interest.
Sources: Insured Retirement InstitutePost author: Charles Couch