The Insured Retirement Institute (IRI) today released new research chronicling how different workplace experiences and employee benefit histories are causing a great divide among early and late Baby Boomers regarding their financial security and outlook on retirement. IRI research shows that those on the tail end of the Boomer cohort will be confronted with added challenges and are less prepared financially to overcome them.
"From a retirement planning perspective, we need to start segmenting the Boomer cohort to ensure that we are appropriately addressing their unique retirement needs and challenges," said Cathy Weatherford, IRI President and CEO. "Those on the backend of the generation have had a much different workplace experience than the first Boomers. They worked most their careers during the defined contribution plan era and will face many of the risks and challenges that have come with it. As a result they will be more self-responsible for their retirement income security. At the same time, late Boomers have less saved for retirement and their low confidence regarding their future financial security reflects this."
While the percentage of all Boomers who are confident they have sufficient funds to cover their retirement years sunk to 34 percent in 2013, results varied within the broader group. Early Boomers, those aged 61 to 66, were slightly more optimistic with 42 percent believing they have enough savings to live comfortably throughout retirement. But for late Boomers, those aged 50 to 55, only 25 percent shared this confidence.
Key findings from the report:
- While savings are lagging for both groups, 47 percent of late Boomers reported having less than $100,000 saved for retirement, compared to 32 percent of early Boomers.
- 43 percent of late Boomers identified a defined contribution plan as a major source of retirement income compared to 36 percent of early Boomers.
- Insufficient savings is the most common reason late Boomers are uncertain as to when they retire, as stated by 27 percent. By contrast, the most common reason for the uncertainty among early Boomers, as stated by 20 percent, is that they enjoy working.
- Of late Boomers, 31 percent are struggling to pay their rent or mortgage and 34 percent are financially supporting an adult child, compared to 20 percent and 21 percent, respectively, of early Boomers.
- More late Boomers remain in the labor force, 80 percent, compared to only 43 percent of early Boomers.