One In Five Baby Boomers Has No Retirement Savings

While the economy is bouncing back from the recession, Baby Boomers may have lasting consequences. New research from Mintel reveals that 20% of Boomers do not have any retirement savings. What’s more, 41% Baby Boomers have less than $250,000 saved for retirement. There are still concerns among Boomers who have been relatively good about saving, with more than $250,000 stashed away. Fifty-two percent are worried about having enough money to retire. Thirty-one percent are worried about outliving their money. Fifty-five percent of non-retired Boomers contribute regularly to a retirement savings account. These concerns are driving some Boomers to put off retirement with 15% saying that they do not plan to retire. This could be the result of Baby Boomers’ lack of education on retirement savings. Mintel research indicates that just 28% of Boomers say they understand enough about retirement investing compared to 11% of Boomers who have saved less than $100,000. Additionally, only one in 10 Boomers manage their finances according to a written financial plan, and 33% use a financial adviser to help with planning and investing. Only 10% of Boomers say they do not have financial concerns about life in retirement.

Boomers agree that major retirement concerns include having adequate health insurance (30%), paying for health insurance (29%) and paying day-to-day bills (29%). The youngest Boomers age 51 to 54 are significantly more likely than Boomers to be worried about having enough money to retire (66%) and paying day-to-day bills (39%). One solution is to engage Boomers in wellness programs.

Employee Benefits’ Preferences Vary by Generation and Gender

Which employee benefits do employees want? It depends on their generation and gender, according to a study by MassMutual. Forty-seven percent of American workers age 18 and older want more vacation time, and 44% want better 401(k) matches. Upon closer inspection, Baby Boomers (ages 50-70) and Millennials or Generation Y (ages 15-35) want more time off from work while Generation X (ages 36-49) want richer retirement benefits, according to the study. Men tend to prefer more time off while women tend to prefer health-related benefits.

“Given the varied preferences for employee benefits, the takeaway for employers is to offer as broad a menu of benefits as possible and consider offering new or expanded benefits on a voluntary or employee-paid basis. We’ve found that connecting to workers based on their age, gender, and life stage drives greater satisfaction with benefits. Offering guidance tools helps employees make the most of their benefits,” said Elaine Sarsynski of MassMutual. The study includes the following highlights:

• 50% of Boomers and 48% of Millennials would choose more vacation days if they could.
• 47% of Gen Xers prefer better 401(k) matches, with more vacation days coming in a close second (44%).
• After choosing more time off, Boomers expressed preferences for financial benefits. Forty-three percent of Boomers want better 401(k) matches, 38% want free healthcare coverage, and 24% want more investment choices for their retirement savings. Forty-three percent want expanded healthcare benefits.
• Millennials want flexible work schedules (43%) and reimbursements for education and tuition (30%). But many Xers want better 401(k) matches. Few Xers have access to pensions, and many Boomers have not saved enough for retirement, according to Sarsynski.
• Men want more vacation time (50%), better 401(k) matches (43%), and flexible work schedules (39%). Women want more vacation (44%), better 401(k) matches and flexible work schedules (40%), expanded healthcare premiums (37%), and free gym memberships (31%).
• In addition, there are bigger disparities between men and women when it comes to benefits, such as free gym memberships (men: 20%; women: 31%), education/tuition reimbursement (men: 18%, women: 27%), and more investment choices for retirement (men: 18%, women: 11%).

The Challenges Faced by Self-Employed Baby Boomers

Steady Revenue from Individual Policies

Twenty-six percent of self-insured Baby Boomers say that rising healthcare costs have reduced their ability to save, and 35% say that the rising cost of health insurance has hurt their business, according to a survey by Ameritrade. The study also reveals the following about self-employed Baby Boomers:

  • 63% don’t have the benefits of traditional employment (paid vacation, a better health benefit package, better insurance, professional support).
  • 51% want the next president to reduce healthcare costs, 64% don’t expect their needs to be among the president’s top five priorities.
  • 52% work long hours; 41% are never able to completely turn off work; 40% cope with constant financial pressure; 39% have had to prioritize their business over their personal life; and 30% have had to spend less time with their family.
  • 76% were traditionally employed before they set up their own businesses.
  • 77% say they could still be traditionally employed if they wanted.
  • 57% say that political and economic changes over the past three to five years are affecting their business.
  • 40% don’t support a $15 minimum wage hike. Thirty percent say it could hurt their business.
  • 20% say that the effects of government regulations have worsened compared to three to five years ago.
  • 61% are more anxious about saving money for retirement now; 59% are more anxious about earning a steady income from their business; and 53% are more anxious about expanding their business.
  • 57% say that political and economic changes, over the past three to five years, are affecting their business.

Alzheimer’s Costs Loom on the Horizon

By mid-century, more than 28 million Baby Boomers are projected to have Alzheimer’s. The cost of caring for them will consume nearly 25% of Medicare spending in 2040, according to research from Alzheimer’s Assn. (conducted by the Lewin Group). Without significant advances in treatment or prevention, there will be a shift toward more severe forms of the disease as the Baby Boomers with Alzheimer’s age, leading to higher Medicare costs. In 2020, the projected Medicare costs of caring for Baby Boomers with Alzheimer’s in the community ($11.86 billion, in 2014 dollars) will be 2.1% of total Medicare spending. By 2040, when the Baby Boom generation is aged 76 to 94, the projected Medicare costs ($328.15 billion, in 2014 dollars) increase to 24.2% of total Medicare spending.

Keith Fargo, PhD of the Alzheimer’s Assn. said, “As Baby Boomers get older, the number of people developing the disease will rise…far beyond anything we’ve ever seen. Fortunately, there is a pipeline of experimental therapies that have the potential to delay the onset of Alzheimer’s and perhaps even prevent the disease.”

Fargo said, “Alzheimer’s is extremely underfunded compared to the magnitude of the problem. If we’re going to change the current trajectory of the disease, we need consistent and meaningful investments in research from the federal government to ensure a more robust pipeline. Where we’ve made significant commitments – heart disease, cancer, HIV/AIDS – we’ve generated effective treatments and prevention strategies, and reduced death rates. Now is the time to do the same for Alzheimer’s disease.”

An Alzheimer’s Association report released this year, “Changing the Trajectory of Alzheimer’s Disease: How a Treatment by 2025 Saves Lives and Dollars.” According to the report, a treatment that delays disease onset could save $220 billion within the first five years of its introduction. It would also cut the number of people who have the disease in 2050 by 42% – from 13.5 million to 7.8 million.

Most Millennials Have Financial Worries.

While the economy has rebounded, the financial environment is still cloudy to more than 50% of Generation Y (18 to 34), Generation X (35 to 54) and Boomers (55+) who have financial concerns, according to a recent financial wellness survey conducted by Harris Poll on behalf of the Million Dollar Round Table (MDRT).
Eighty-four percent of Generation Y, 83% of Generation X and 66% of Boomers have financial concerns. The top financial concern among each generation is not having enough money in emergency savings funds, (51% of Generation Y, 50% of Generation X and 34% of Boomers). A close second for Generation Y (42%) and Boomers (31%) is not being able to pay off monthly bills while almost half of Generation X (48%) fears not being able to retire when they want.

“Most people have a spending issue that drives their insecurity. Setting aside a small amount of money can quickly turn into a few hundred dollars that can be seed money for an emergency fund,” said MDRT’s First Vice President, Brian D. Heckert, CLU, ChFC.

Thirty-eight percent of Generation Y, 40% of Generation X and 29% of Boomers feel having no debt would make them most secure with their finances. Having more financial education ranked lowest among each generation, Generation Y (4%), Generation X (1%) and Boomers (1%).

MDRT’s second vice president, Mark J. Hanna, CLU, ChFC said, “People have 100% of the ability to tackle their debt with the help of a financial advisor. Developing a budget and avoiding the use of consumer credit cards to pay for daily expenses will keep most people out of financial stress.”

Among credit card, mortgage, student loan and car debt, all three generations rank credit card debt as the debt they would choose to pay off first (29% of Generation Y, 40% of Generation X and 46% of Boomers). Generation Y ranks paying off credit card debt slightly higher than paying off student loan debt (29% vs. 28%, respectively). Paying off mortgage debt is ranked second for Generation X (29%) and Boomers (30%).
According to Heckert, “Mortgage debt is the last debt typically recommended to pay off. A mortgage is secured by the house and usually has the least amount of interest of any loan. It’s important to first pay off high-interest debt such as credit cards.”

When asked how they would adjust their spending if they wanted to save more money, all three generations noted dining out less, Generation X (32%), Generation Y (32%) and Boomers (22%). Reducing entertainment and home expenses were the next two top saving areas. “Saving just 5% on a monthly budget across all of these expenses could save the average family making $60,000 a year about $3,000 per year or $250 per month. That sum saved over a 10-year period would amount to a very nice fund for college or an addition to a retirement program,” Heckert said.

When asked what the most important piece of financial advice is, Millennials said it’s to start saving/investing (29%) and make a financial plan (28%). Their older counterparts noted paying off high-interest debt as most important, Generation X (28%) and Boomers (28%).

Interestingly, 48% of Generation X said not being able to retire is one of their top financial concerns, yet only 9% said saving more for a comfortable retirement was the most important piece of financial advice to know.
According to the study, 50% of Generation Y, 35% of Generation X and 25% of Boomers have not done anything to prepare for retirement. Ten percent of Millennials have spoken to an advisor to prepare for retirement compared to only 7% of Generation X.

Promoting Employee Benefits by Generation

Employers who address employees’ generational needs could see higher benefit enrollment, according to a report by Securian Financial Group. The white paper offers the following strategies for each generation:

• Baby Boomers (born 1946 to 1964) appreciate honest, simple language and financial scenarios. They also want information about estate planning.

• Generation X (born 1965 to 1981) respond to virtual marketing and a focus on significant life events such as marriage, having children or job change.

• Millennials (born 1982 to 1993) respond to online resources. They also want open lines of communication with HR to get support.

Paula Bilitz, director, Group Life Marketing, Securian Financial Group said, “Another approach to improving benefits enrollment is to ask employees what they like and don’t like about the current process. Employees are often willing to share critiques of their company’s benefits communications and provide suggestions for making them better.”

Boomers Don’t Expect Their Children to Foot LTC Costs

About half of people age 50 and over say that paying for their LTC costs will take away from the money intended for their children as an inheritance. Forty-three percent would rather use these funds to cover LTC costs than pass money to their heirs. However, the escalating costs of health care and lack of proper planning have many Americans hoping just to break even and not be a burden to their children. The Harris Interactive poll surveyed 813 Americans age 50 or older with at least $150,000 in income or investable assets.

Only 21% expect their children to be helping them in retirement – including giving physical care and financial support, and letting them live in their homes.

The survey also reveals the following:

• 45% have discussed the cost of LTC with their spouse; 23% have discussed it with their financial advisor; 10% have discussed it with their children; and 6% have discussed it with their parents.
• Only about 11% of people over 55 have LTC insurance.
• 23% are not planning for LTC expenses; 22% plan to cover the costs with their 401(k) or retirement savings; and 21% plan to use their personal savings.
• 64% are not aware that some states have laws that can force children to pay their parents’ unpaid nursing home bills.

John Carter, president of distribution and sales for Nationwide Financial said, “It is important to start discussing LTC planning as a family and develop a well thought out plan so that parents and children understand where LTC funding will come from and parties feel secure in the approach.” The traditional stand-alone LTC policy is the most commonly known long-term planning choice. While these products are very customizable, some people don’t like the use it or lose it aspect. Some innovative products include LTC riders that can be added to life insurance coverage, he added.

Advisors report that only 15% of their clients have a good understanding of the potential costs of LTC. People living to age 65 have a 70% chance of needing some type of LTC in their lifetime. The average cost per year for a nursing home is projected to be $265,000 by 2030 and that is not even for a private room. For more information, visit http://www.nationwide.com/life-insurance.jsp.

Americans Are in the Dark about Preventive Coverage

Thirty percent of U.S. adults don’t know what kind of preventive care their policy covers, according to a report by TeleVox. Only 32% of Baby Boomers are receiving their recommended preventive care. Eleven percent 11% of mothers say they have no idea what preventive care actually means. For more information, visit www.televox.com.

How Financial Strain Increases the Need for Disability Coverage

The recession, along with higher health care costs and a multi-generational workforce, have created a unique situation for employers. Many Baby Boomers are working longer to recoup money lost during the Great Recession. Baby Boomers who are forced to delay retirement, are creating a workplace with higher likelihood of serious illness or injury, which can strain employer health care costs, according to an industry analysis by Standard Insurance Company.

Alex Dumont of The Standard said that it is increasingly important to offer Baby Boomers return-to-work, stay-at-work and wellness programs. But, younger age groups are also facing financial challenges including slowed upward movement and increased family responsibilities, such as caring for children and aging parents. Dumont said, “We’ve seen the cost of caring for children and aging parents rise over the last 10 years, placing a significant financial burden on Generation X and Millennials. These generations, sometimes referred to as the ‘sandwich generation’ are more likely to use family and medical leave benefits to care for family members. They are not afraid to use these benefits, especially since they can’t always afford to pay for family care services.”

To help employers manage costs associated with family medical leave, The Standard suggests giving workers more flexibility, including options for where and when they can work. A comprehensive absence management program should also be provided. For more information, visitwww.workplacepossibilities.com.

CDC recommends one-time hepatitis C test for baby boomers

The CDC on Thursday recommended one-time hepatitis C testing for all Americans born between 1945 and 1965. The chances of having the disease are five times greater for baby boomers than other adults, CDC Director Dr. Thomas Frieden said. The agency previously recommended the test only for those considered at risk. The final recommendations were published in the CDC’s Morbidity and Mortality Weekly Report. U.S. News & World Report/HealthDay News (8/16), Reuters (8/16)

Last Updated 06/29/2022

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