Baby boomers fearful, indecisive about retirement
May 26, 2011
A new study has found that the oldest baby boomers, who are starting to turn 65, are frozen with fear about retirement.
The study from Financial Engines, a California investments advisor that manages 401(k) savings accounts for nearly 500,000 U.S. workers, also found that these so-called 'early boomers' don't trust financial advisers - even as they admit they need financial advice.
The early boomers' big fear, according to Financial Engines, is that they could wind up in poverty if their retirement savings accounts run out. More than half of the 300 boomers interviewed for the study between 2008 and 2011 said they were afraid of their retirement checking account running dry.
According to The Baltimore Sun, these anxieties are a result of early boomers who have to transition from workers counting on a pension to workers relying on their own investments, such as money market accounts, 401(k) plans and similar savings accounts. What's more, it's a group that lost a lot of money during the recession and has watched as the financial industry has been wracked by fraud and mismanagement.
The report comes on the heels of a Bankers Life and Casualty Company Center for a Secure Retirement study that found that baby boomers making between $25,000 and $75,000 annually say they will be delaying retirement for at least five years because they can't afford to stop working.
That study found that two-thirds expected to have more saved than they have and less than one in four feels they are on target with their retirement savings needs. Three out of four expect to work in their retirement.
Who's judging your retirement funds?
Part of the problem is that retirees who haven't saved enough don't attract much attention from financial services companies while those who have large retirement savings accounts get plenty of offers in the mail. Participants in the Financial Engines study said financial advisers, after reviewing their meager assets, made them feel worse about their situation.
In May, The Wall Street Journal quoted study co-author David Ramirez saying that the financial services industry needs to be sensitive to the fact that "people don't need to be judged."
The Journal recommended retirees with questions about such key matters as when to take their pension or when to file for Social Security benefits should check to see if the company they work for has a retirement-income product to help them manage their money in retirement. It also recommended hiring such companies as Smart401k.com, which charges an annual flat fee for retirement-investing advice.