Lower investable assets, cost of health care
are delaying Retirement for Some Boomers
CHICAGO, Dec. 9, 2014 — More than nine in 10 (94%) working middle-income Baby Boomers have plans to retire one day, but many will be working past age 65, according to a new study commissioned by Bankers Life Center for a Secure Retirement ® (CSR).
The study – The Middle-Income Boomer Retirement Gap: Savings, Education and Advice – surveyed 1,000 Americans aged 50 to 68 with an annual household income between $25,000 and $100,000. Of the respondents, 45% were already retired.
Of those still working, more expect to retire after age 65 (43%) than before age 65 (16%). Just two in 10 (19%) expect to retire at age 65.
Financial barriers to a comfortable retirement
Although Boomers are optimistic about retirement, many are concerned about meeting their financial needs in retirement.
While one-third (38%) feel very or extremely confident about their retirement savings, two-thirds (62%) express some doubts, with a quarter (25%) being not too confident or not at all confident.
Greater investable assets equal greater peace of mind
Middle-income Boomers view a half-million dollars in investable assets as the financial threshold for retirement security. Two-thirds (66%) of those with investable assets between $500,000 and $1 million, and nearly nine in 10 (86%) of those with investable assets greater than $1 million, are very confident their money will last throughout their retirement.
However, most middle-income Boomers have not achieved this level of asset attainment. Only one in 10 (13%) Boomers had investable assets of $500,000 or more. Even more concerning, more than half (54%) have less than $100,000 and one-third (34%) reported investable assets of less than $25,000.
One explanation for lower investable assets may be that Boomers are heavily invested in their homes. While the median investable assets are $25,000 to $100,000, the median home equity value reported by survey participants was $100,000 to $250,000.
Health care expenses a growing concern, with good cause
According to the National Center for Health Statistics, the life expectancy of a 65-year-old has grown by 37% since 1950. As a result, the amount of money needed to fund a secure retirement – especially health care – has grown as well.
In an August 2013 CSR survey, Retirement Care Planning: The Middle-Income Boomer Perspective, middle-income Boomers estimated the cost of one year of nursing home care at $46,890. Yet the true cost is nearly double: $90,520 on average. With median investable assets of $25,000 to $100,000, one year in a nursing home could effectively consume the entire savings of many middle-income Boomers.
Further, Boomers are largely unprepared for managing major changes in their health:
- 65% don’t have a current health care power of attorney
- 64% lack an up-to-date living will
- 63% do not have a current last will and testament
“Boomers are facing a challenging retirement environment, but just about any of them can improve their financial security through a combination of investment and protection products,” said Scott Goldberg, president of Bankers Life. “A professional advisor can play an important role in repositioning assets for future income and reducing the risk of financial disruption throughout retirement.”
The Middle-Income Boomer Retirement Gap: Savings, Education and Advice is part of a series of studies commissioned by the Bankers Life Center for a Secure Retirement. It was conducted in July 2014 by the independent research firm The Blackstone Group.
The internet-based survey consisted of a nationwide sample of 1,000 Americans. All respondents were aged 50 to 68 and have an annual household income between $25,000 and $100,000.
Quotas were established based on the U.S. Census Current Population Survey data for age, gender and income to obtain a nationally representative sample. The margin of error is +/- 3.1 percentage points at the 95% confidence level.
About the Center for a Secure Retirement
The Bankers Life Center for a Secure Retirement is the Company’s research and consumer education program. Its studies and consumer awareness campaigns provide insight and practical advice to help everyday Americans achieve financial security in retirement.
Bankers Life products focus on the insurance needs of the middle-income retirement market through nationwide subsidiaries of CNO Financial Group, Inc. (NYSE: CNO). These companies offer a broad portfolio of life and health insurance designed especially for those near or in retirement.