Northbrook, Ill., Aug. 21, 2002— Rising healthcare costs and a faltering economy have, in just one year, nearly doubled Baby Boomers retirement concerns, according to the second annual Allstate “Retirement Reality Check” survey. Yet a glance at their savings and financial planning habits indicates that this worry has not persuaded them to take action.
In one of the 2002 study’s most compelling findings, 52 percent of the Baby Boomers surveyed acknowledge worries about having sufficient retirement funds — up from 29 percent who expressed this concern in 2001. Worries about healthcare costs rose from 39 percent to 67 percent in the same time period. And when it comes to fears about retirement, female Boomers are more worried about not having enough money (55 percent vs. 48 percent of males), Social Security disappearing (54 percent vs. 40 percent of males), and getting sick (52 percent vs. 45 percent of males).
In addition, among those Boomers surveyed, average retirement savings also declined from nearly $120,000 in 2001 to $93,000 in 2002.
“We recognize there’s a disconnect between what Baby Boomers expect out of retirement and where they are headed if they don’t seek help,” said Tom Wilson, president of Allstate Financial, a business unit of The Allstate Corporation. “This is a tough time for consumers, with market conditions being extremely volatile, but there are things consumers can do to stabilize their financial situation and gain confidence with their retirement planning.”
The difference between the money consumers will have and the money they’ll need for retirement is called the retirement income gap. Financial experts say you’ll need about 75% of your current income if you want to live your retirement years in a way that’s similar to how you live now. But Social Security and pensions will most likely fall short of providing that level of income. And the experts say that the rest is up to the individual.
Are Boomers financially prepared?
Seventy-four percent of surveyed Baby Boomers say they are financially prepared for retirement.
Reality Check: Although the majority of surveyed Baby Boomers are confident they know how much money they will need for retirement, 59 percent of those surveyed expect to carry some form of debt into retirement, whether it is a mortgage (27 percent), car payments (36 percent), or credit card balances (28 percent).
Р’В· And of the surveyed Baby Boomers who have not yet saved for retirement, 64 percent say that they cannot afford to save for retirement at this time, with 53 percent planning to start saving at a later date.
Boomers operate without financial roadmaps
Two out of three (66 percent) survey respondents feel they have enough knowledge to make appropriate financial decisions on their own.
Р’В· Reality Check: 62 percent of surveyed Boomers report that choosing the right kind of investment is a challenge.
Р’В· Over one-third (34%) of those surveyed believe that financial institutions are not interested in having them as clients. This was especially true for Hispanic Baby Boomers (44%).
Р’В· And of the 56 percent of survey respondents not working with a financial advisor or broker, one-third (33 percent) believe they would benefit from professional advice, especially given the state of the economy.
Р’В· The survey also indicated ethnic differences. Of the 58 percent of surveyed African American Baby Boomers that do not currently work with a professional financial advisor, 49 percent feel that they may benefit from the guidance a financial professional could offer. While over a third (34 percent) of surveyed Boomers believe that financial institutions aren’t interested in them, this notion is especially prominent among Hispanic Baby Boomers, with 44 percent of respondents believing this to be true.
“It’s a mistake to think that only wealthy Americans should work with a financial planner. That’s like saying only people who go on expensive vacations need a road map,” said Wilson. “Advice plays such an important role in having a safe and secure retirement — no matter how much money you have.”
Surveyed Baby Boomers look forward to a retirement full of leisure activities including reading, exercise and vacationing.
Р’В· Reality Check: Respondents to the survey estimate spending close to $13,700 on leisure activities each year of their retirement on such activities like reading, exercising and vacationing by car or motor home.
Р’В· Unlike the general population surveyed, Hispanic Baby Boomers estimate that they will spend $10,000 a year on leisure activities, while African American respondents anticipate spending $11,700 a year on leisure activities during retirement.
Р’В· According to the survey, male Boomers look forward to participating in outdoor activities during their retirement, such as fishing or golf, while female Boomers anticipate home-based activities such as reading and gardening.
“Allstate can help guide Americans down a path of smart decisions to help them make choices now so they are able to live the retirement they are envisioning. Our approach is based on the need of the consumer, as we understand that financial services are not one size fits all,” said Wilson. “Whether they want to go mountain climbing in the Andes, volunteer at their local hospital, or spend more time with their grandchildren, Allstate can help them develop the systematic approach to savings they will need to achieve their individual retirement dreams.”
The nation’s largest generation, Baby Boomers are seventy-six million strong. Boomers (age 38 — 56) make up 29 percent of the U.S. population. By the year 2030, there will be 70 million people aged 65 and older—more than twice the population for that age group in 1999, according to the U.S. Bureau of Labor Statistics.
The second annual Allstate “Retirement Reality Check” survey was created by Allstate in conjunction with Harris Interactive. Using a random digit dialing methodology, Harris Interactive polled 1,400 people born between 1946 and 1961, with household incomes ranging from $35,000 to $100,000. A sample of 200 African-Americans and 200 Hispanics were interviewed as part of the total sample surveyed. The margin of error is Р’В±3.1 percent for the general population, and Р’В±6.9 percent for information specific to Hispanics and African-Americans.
The Allstate Corporation (NYSE: ALL) is the nation’s largest publicly held personal lines insurer. Widely known through the “You’re In Good Hands With AllstateР’В®” slogan, Allstate provides insurance products to more than 14 million households and has approximately 12,500 exclusive agents and financial specialists in the U.S. and Canada. Customers can access Allstate products and services through Allstate agents, or in select states at allstate.com and 1-800-Allstate. EncompassSM and DeerbrookР’В® Insurance brand property and casualty products are sold exclusively through independent agents. Allstate Financial Group includes the businesses that provide life insurance, retirement and investment products, through Allstate agents, workplace marketing, independent agents, banks and securities firms.
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