The persistence of our dragging economy has created a lot of concern for baby boomers and their retirement prospects. One concern is that the stock market crash has eaten up a lot of boomers retirement income and forced them to delay leaving the workforce. Another common belief is that boomers are temporarily leaving the workforce during the bad economy and plan to return once things turn around. However, a recent Metlife survey is offering a very different view of boomers and their exodus from the workforce.
More Boomers Are Retiring Than Expected
Contrary to the “boomers will be staying to rebuild stock investments” view or the “boomers will be back in a few years” theory, boomers are leaving the workforce en masse and many aren’t planning a return. In fact, the rate of departure, for those 65 and not coming back, has more than doubled in the last few years. In 2008, about 19% were fully retired compared to 45% in 2011.
One Quarter Retired Early for Health Reasons
Of the boomers already collecting social security, almost half retired earlier than planned. Of those, almost another half retired early for health reasons. While everyone hopes to enter retirement healthy, there is a large population of boomers forced into retirement due to illness and health complications. It’s a sobering reality for us younger folk and those in view of their fifties. Health considerations are a necessary consideration for our retirement plans.
One Quarter Retired Late for Budget Complications
If health concerns weren’t enough bad news for your retirement planning, one quarter of retired baby boomers retired later than planned, citing income requirements for day-to-day expenses. This statistic is harder to theorize about. If anything, I tend to think people have a rosy outlook on when they’ll be retiring in the first place. However, another likely culprit could be inflation. It’s easy to know that prices are going to increase over time, but it’s another issue to successfully save and cover those price increases. I’d suggest assuming that inflation will be slightly higher than you think; that might help get you to retirement at the age you plan.
Warm Fuzzy Feelings for Future Social Security Benefits
Nearly two-thirds of boomer retirees are confident in their social security benefits and that those entitlements will be sufficient for their lifetime. While this warm, fuzzy feeling could be naïve, it is a positive finding.
It could be that boomers are confident that politicians will not be seriously curtailing benefits. However, I’d like to think that it is because retirees have sufficient alternative savings to weather potential changes. Either way, boomer outlook on social security seems more solid than I would have expected.
While boomers are starting retirement confident, time will tell whether or not the latest retirement generation was ready to leave the workforce. Until then, learn from the successes and failures of the generations already in retirement and plan your savings to meet those contingencies.