When it comes to retirement, no generation does it the same. The economic climate, political circumstances and financial views all play a role in how each age group approaches retirement.
The financial crisis and Great Recession hit Americans’ savings hard, no matter their age; but for baby boomers, the clock is ticking to repair their nest eggs.
Transamerica Center for Retirement Studies (TCRS) recently released the results of its 15th Annual Retirement Survey of workers, that shows baby boomers, Generation X and Millennials all have different retirement realities ahead of them.
The survey also details how each generation is recovering from the recession and how the downturn has influenced their retirement outlook.
Catherine Collinson, president of TCRS, discussed the survey’s findings and what they mean for baby boomers. Here is what she had to say:
Boomer: How are baby boomers recovering in the labor market following the recession, and how does that affect their financial future?
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Collinson: Most baby boomers are planning to stay in the workforce as long as possible. Sixty-five percent plan to work past age 65 or do not plan to retire. Their plan to extend their working lives beyond 65 and delay full retirement is important for them in order to bridge retirement savings shortfalls, continue generating income, and stay active and involved.
Boomer: Opinions of workers surveyed about the state of recovery in 2014 differ from most economists. What are some of these findings?
Collinson: Economists declared the Great Recession ended in 2009, however, American workers have their own views and opinions about the state of the economy. Thirty-five percent of workers (40% of baby boomers) feel that the recession is not yet over. What’s more, 65% of all the respondents and 60% of baby boomers say the recession has ended but with mixed opinions about whether the economy is improving, stalled, or declining again. Only 2% believe that the economy has fully recovered, and no baby boomers hold this sentiment.
Few American workers felt they were left unscathed by the Great Recession and most are still contending with its effects. Only 14% of workers say that they have fully financially recovered and 13% of boomers shared this sentiment.
Boomer: Why is today’s vision of retirement a radical departure from earlier generations?
Collinson: Baby boomers are pioneering a new retirement paradigm. Gone are the days of their parents’ generation of the gold watch retirement – a farewell office party followed by full-time leisure and never having to set an alarm clock again.
Most baby boomers are planning to work longer and retire later for reasons of income, benefits, and staying involved. They are forging a new retirement in which they are taking time to enjoy life while working in some capacity, such as part-time or an encore career, is possible and even preferable.
Boomer: What did the survey find is the current state of retirement readiness for baby boomers?
Collinson: Most baby boomers are not ready for retirement in terms of expectations and preparations. Many expect to continue working, yet relatively few are taking enough proactive steps to stay marketable in today’s rapidly changing employment market.
Financially speaking, many baby boomers have not yet saved adequately enough to fund a full retirement or made adequate preparations in terms of a retirement strategy or backup plan for income if forced into retirement sooner than expected.
Boomer: How can employers help to improve their employees retirement outlook?
Collinson: Baby boomers are envisioning a transition into retirement that involves either shifting from full-time to part-time work and taking on work which is more personally satisfying and/or less demanding.
However, few employers have programs in place to accommodate this type of transition. Employers have a tremendous opportunity to facilitate the baby boomers’ transition while benefiting from seasoned talent who can help with mentoring, training, and even succession planning. Employers are also in a wonderful position to assist with financial aspects of retirement by encouraging their employees to take advantage of planning- and counselling-related resources offered by their retirement plan providers.