Affluent Baby Boomers Ignore Retirement Planning

Many affluent retirees apparently haven’t been convinced that failure to plan is planning to fail, according to a new survey.

 

A third of affluent retirees have no retirement plan at all, according to a survey conducted by MFS Investment Management. An even larger percentage of preretirees age 55 or older, 52%, do not have a retirement plan.

 

The survey talked to retirees and preretirees with at least $100,000 in liquid investable assets and who have a relationship with professional financial advisors. The study, conducted in July, showed that the use of an advisor doesn’t necessarily lead to the creation of a retirement plan. The survey, in fact, found that among the 55-and-over preretiree group, over a third do not plan to discuss a retirement income plan with their advisor for another six or seven years, if ever.

 

The survey also showed a wide gap between the expectations of preretirees, and the reality faced by those already in retirement. When asked to state what age they expect to retire, for example, preretirees give a mean answer of 66, with 17% planning to work beyond age 70. Surveyed retirees, however, reported a mean retirement age of 59.

 

Also, 55% of preretirees plan to work at least part time in retirement, but advisors who participated in the study reported that few to none of their affluent clients work part time in retirement. Preretirees also expect to wait a few years after retirement before withdrawing from their savings account, with an average target age of 68. The reality: most retirees who have begun withdrawing at age 64.

 

Illustrating the trend toward defined contribution retirement plans, more than 70% of retirees rank pensions as a source of income compared to only 54% of preretirees. Meanwhile, 74% of preretirees cite 401(k) plans as a source of income, compared to only 33% of retirees.

 

One area in which both preretirees and retirees have similar views is concerns about the future. A majority of both groups, while generally satisfied with their retirement savings, fears that rising inflation, health-care costs and other issues beyond their control could cause them to outlive their savings.

 

I guess my first question would be what is meant by a retirement plan. What do you think it means? Do you have one? Do you think you need one? Take our survey and feel free to leave additional comments below.

 

 

SOURCE:

 

1. "Frontline News"; Financial Advisor; October 2006

http://www.fa-mag.com/past_issues.php?id_content=3&idPastIssue=114&show=fronline

 

Kim Snider, Kim Snider Financial Communications, Chronim Investments and/or Snider Advisors make no representation that the information and opinions expressed are accurate, complete or current. The opinions expressed should not be construed as financial, legal, tax, or other advice and are provided for informational purposes only. Call 866-952-0100 to request the Snider Investment Method™ Owner's Manual, which includes a description of the Snider Investment Method, investment objectives, risks, suitability and other information. Please read and consider carefully before investing. All investments are subject to risk including possible loss of principal.