Will Baby Boomers
Have Enough Money to Retire?
Gallup's annual Economy and Personal Finance Survey shows for the first time that a majority of those not retired say they will not have enough money to live comfortably in retirement.
2012 Gallup's Annual Economic and Personal Finance Survey
52% of Baby Boomers will not have enough money to comfortably retire
41% of will have enough money to comfortably retire
Gallup surveyed not-yet-retired Baby Boomer Americans and asked them if they anticipated having enough money to retire “comfortably” when the time came.
For the first time this decade, a majority of non-retired Americans doubt they will have enough money to live comfortably once they retire.
In 2002 59% of non-retirees were confident that they would have enough retirement income to live comfortably.
Of course, exactly what it means to retire “comfortably” has probably changed over the years. (Gallup, unfortunately, did not ask Americans how much money they would need to retire comfortably, just whether they expected to have enough income to meet the goal.) I bet expectations for the amount needed for comfortable retirement have changed even in the last 10 years — though I’m not sure which direction they may be heading.
On the one hand, standards of living have increased, so expectations for the lifestyle that retirees are entitled too have probably risen. On the other hand, perhaps this recession is acclimating Americans to the idea of spending much less than they have been, which may in turn reduce how much income they expect to need in retirement.
This year's update, included as part of Gallup's annual Economy and Personal Finance survey conducted April 6-9, also shows an 18-point drop in this measure among non-retirees compared to just five years ago. This marks the first time since Gallup has been tracking the measure that a majority of those not retired say they will not have enough money to live comfortably in retirement.
The reasons for this rising concern about retirement income became clearer when one examines trends in how much non-retirees expect to rely on each of 10 income sources in retirement.
The trends for these 10 items (401(k) or other retirement savings accounts, Social Security, home equity, pensions, part-time work, savings accounts or CDs, stocks or stock mutual fund investments, annuities or insurance plans, inheritances, and rent/royalties) as "major sources" of retirement income can be seen by clicking the appropriate tab in the accompanying graph.
It is probably not surprising that Americans have a more pessimistic attitude about funding their retirement now than they did a few years ago. Americans have been told repeatedly in recent years that Social Security alone will not provide enough to live on -- and even that the Social Security system will eventually run out of money.
Fewer Americans today enjoy the potential benefit of a traditional pension plan. Thus, Americans have come to realize that more of their retirement income will need to come from their own resources.
The reasons for this pessimism are evident when you look at Gallup’s other questions regarding what sources of income Americans count as their primary financial cushions.
In 2009, the percent of people who said they would rely on home equity or on retirement accounts as a “major source of income” declined, while the percentage of people who said they would rely on part-time work as a “major source of income” increased.
Those who say they plan to rely largely on part-time work has been increasing for most of this decade, though. In 2001, 10 percent of respondents said part-time work would be a major source of retirement income; that percentage has more than doubled to 22 percent today.
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