Baby Boomers Redefining 'Golden Years'


The concept of retirement in the U.S. has been around since the early 1900s and originally meant spending a few good years resting after a lifetime of labor.  For the baby boomer generation, the "golden years" are barely resembling that early definition, especially since today people are living longer.

A recent Franklin Templeton survey ( found that the concept of retirement is loaded with contradictions in both attitude and preparedness. “Americans have long struggled with preparing for the realities of retirement,” said Michael Doshier, vice president of Retirement Marketing for Franklin Templeton Investments. “The survey uncovered several contradictions related to the degree of understanding and often divergent approaches to retirement.  Doshier offered these additional findings from the survey:

Boomer:  What are some of the top retirement concerns found in the study and why?

Doshier:  Concerns vary depending on your stage of retirement thinking. Running out of money, and health and medical issues are the top concerns for many pre-retirees. Running out of money is the top concern for pre-retirement, and during retirement, concern for health and medical issues increases steadily, while worry over the risk of living too long/outliving one's assets tends to fall off. So, while it's nice to know that retirees may worry less about money, it's clear that having a plan to address medical expenses is important. It is also important to note, we found that having a plan to cover medical expenses doesn’t necessarily reduce health and medical related concerns. Thirty four percent of those with a plan to address medical expenses still noted this issue as their top concern.

Interestingly, inflation is only a concern for 8% overall, yet it increases as people age. In fact, inflation is the number one financial concern for people 75 and older, which points to the reality that it's something pre-retirees should be mindful of – retirement might last a very long time.

Boomer:  What can boomers do to avoid underestimating the impact of inflation especially in later retirement?

Doshier:  It may sound like a no-brainer and, certainly, we've all heard some version of this mantra before, but the number one piece of advice from retirees was, "save early, often and consistently." And we found that pre-retirees simply are not doing that to the degree that they should be. We can't begin to address inflation, without having retirement savings to protect from it.

One way to address inflation, both in saving for and providing retirement income, is to consider growth-oriented investments, such as equity funds. Interestingly, 20% of the retirees we surveyed recommended that pre-retirees should “consider more growth-oriented investments."

Another option, where appropriate, may be tax-deferred investments like IRAs, 401(k)s and annuities. And if your employer offers a retirement plan, such as a 401(k), you already have instant access to a tax-deferred retirement vehicle. Making the most of the time you have left in the workforce to maximize your 401(k) contributions is an important consideration to make.

Boomer:  What did the survey find about attitudes toward retirement shifting?

Doshier:  There were some surprises.  Interestingly, we found that many people actually enjoy working and don't want to or plan to retire. Others plan to work further into retirement, perhaps part time, to supplement their income or simply just retire later.

Younger respondents were more likely to worry about boredom and lifestyle issues in retirement, but those concerns tend to fall as people get older. Boredom was not an issue for those in retirement.

Also, people with children are four times more likely to say that financing education is a reason they would have to delay retirement. Perhaps saving for college should be considered a retirement expense.

What's less surprising is that 93% of those who do plan to retire are looking forward to it. For many, retirement is still very much associated with positive emotions and images, such as freedom, travel and spending time with family and friends. So if you're in that retirement-oriented frame of mind, it's probably best to heed the savings advice of retirees that we touched on earlier and create a comprehensive plan for retirement savings and income.

Boomer:  What are some reasons why 59% of retirees say they took Social Security before full retirement age which offers higher benefits?

Doshier:  There still seems to be a lot of uncertainty surrounding Social Security and 59% of retirees surveyed did, indeed, start collecting it before full retirement age. Too often, people may be missing out on opportunities to optimize their Social Security benefits by taking them too early. From the responses we received, it seems as though many people just don't have enough information on the issue. For example, 39% don't know with a high degree of confidence how much of their current income Social Security will replace and 37% simply aren't confident in it as an expected income source. Many have taken it just because “they could.” This is why we have created an extensive suite of educational materials for consumers and advisors to help them re-think their approach to Social Security, as well as a tool to help advisors optimize their client’s Social Security filing and integrate it with their overall retirement income plan.

Boomer:  Are boomers still looking forward to retirement?

Doshier:  Yes, they are.  As mentioned earlier, the majority of people – across all generations – are looking forward to it. And boomers are certainly no exception. In fact, 93% of Baby Boomers are looking forward to it. Some of our open-ended responses included descriptions such as "a new stage of life", "travel and time to continue enjoying life" and "change is good and can be fun." And that sounds pretty positive.

Yet we've also found that some people don't necessarily want to retire. That may be side effect of improvement in health care and medicine and increasing lifespans or the fact that, for some, work is part of their identity.

Whatever the case, retirement is an evolving landscape that we plan to continue to study and, hopefully, learn from.  What are some reasons why 59% of retirees say they took Social Security before full retirement age which offers higher benefits?