During a conversation with my mom a few nights ago, she mentioned something that both resonated with me and validated a position I’d maintained for some time.
It happened as I detailed my difficulties in finding employment as I approached my 50th birthday. My mom responded – most assuredly in a helpful manner – that people my age are usually getting ready to retire. Perhaps, she said, that was something I should consider. When I replied that I still had 15 to 20 working years ahead of me, it was her turn to be surprised. For Mom, age 50 meant that retirement was approaching. For me, age 50 means that I am in the second half of my career.
And, my family is fairly representative of others. Among the findings in the recently released 2013 Retirement Confidence Survey by the Employee Benefit Research Institute (EBRI) and Mathew Greenwald & Associates was that today’s workers expect to retire at a later age than that of their counterparts of a generation earlier. Specifically, 36% of today’s workers expect to retire after age 65, up from just 11% in 1991. And, only 9% of today’s workers expect to retire before age 60, down from 19% in 1991 and 24% in 1998.
Even so, the EBRI/Greenwald survey reports that 37% of today’s retirees were younger than age 60 when they retired, continuing a two-decade-long trend of retirements occurring before they were expected. Many of these early retirements, according to the survey, were due to unexpected, negative events such as loss of employment. And, this leads us to an important point—one that I shared with Mom during our call. Today’s workers do not have the confidence that our retirement savings will sustain us for the rest of our lives. The EBRI/Greenwald survey found that 49% of today’s workers have little or no confidence that their retirement savings will be able to provide a comfortable lifestyle; this is up considerably from the 1995 survey, in which 27% expressed that same sentiment.
The selection of a retirement date is just the beginning. The retirement experience of my generation will bear little similarity to that of our parents, resulting in a population of trailing edge Boomers who will not be able to look to their parents for retirement advice. If we rely on the same strategies as our parents did, we will find ourselves in a critical situation when the time comes. The retirement crisis is very real, and education for advisors and individuals will be instrumental in helping Boomers forge a path to lifelong financial security.