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So-called "baby boomer" retirees are set to reinvent retirement, according to The New Retirement Survey, a new study produced by Merrill Lynch in association with Harris Interactive and Age Wave. The majority of boomers surveyed in the study say that they plan to keep working and earning in retirement. But they will do so by alternating between periods of work and leisure, so creating a new retirement model. For the full story,
"Baby boomers fundamentally will reinvent retirement, and this has profound implications for how we at Merrill Lynch need to advise this generation of clients - individuals as well as retirement plan sponsors," said James P. Gorman, president of Merrill's Global Private Client Group (GPCG). "With boomers living longer and remaining engaged and employed beyond age 65, many of the traditional financial assumptions regarding retirement need to be reexamined. This survey provides a useful starting point." The new report provides many insights into the hopes, fears and motivations of post World War 2 baby boomers, many of whom are set to enter the ranks of the retired. It also examines he impact that this will have on the US economy and a number of other activities. Its findings include: A new retirement 'turning point.' While 76 percent of boomers intend to keep working and earning in retirement, on average they expect to 'retire' from their current job/career at around 64 and then launch into an entirely new job or career.
A new life stage. Since Social Security established the 'normal' retirement age at 65, life expectancy for a 65-year-old has increased by over seven years and continues to lengthen. As a result of living longer, this generation plans to be 'younger' longer and work longer. Most boomers (65 percent) will stop working for pay and retire in the traditional sense at some point. However, that phase is more likely to begin in the late 60's, rather than at age 60 or 65.
The rejection of a life of either full-time leisure or full-time work. When probed about their ideal work arrangement in retirement, the most common choice among boomers would be to repeatedly 'cycle' between periods of work and leisure (42 percent), followed by part-time work (16 percent), start their own business (13 percent) and full-time work (6 percent). Only 17% hope to never work for pay again.
Work provides mental stimulation. It isn't just about money. While 37 percent of the boomer generation indicate that continued earnings is a very important part of the reason they intend to keep working, 67 percent assert that continued mental stimulation and challenge is what will motivate them to stay in the game.
The transformation of the 'me' generation into the 'we' generation. The 'me' generation has grown up - now with deep concerns for the well-being of their children, their parents and their communities. Boomers are now ten times more likely to 'put others first' (43 percent) than 'put themselves first' (4 percent).
The unpredictable cost of illness and healthcare is by far boomers' biggest fear. They are three times more worried about a major illness (48 percent), their ability to pay for healthcare (53 percent) or winding up in a nursing home (48 percent), than about dying (17 percent).
Boomer women are better educated, more independent, are simultaneously juggling more work and family responsibilities and are more financially engaged than any generation in history. Married boomer women are more than six times more likely to share responsibility for savings and investments compared to their mothers' generation (33 percent now compared with 5 percent then).
Boomer women are dreaming of retiring to Mars while boomer men hope to retire to Venus. Boomer men are looking forward to working less, relaxing more, and spending more time with their spouse. While boomer women view the dual liberations of empty nesting and retirement as providing new opportunities for career development, community involvement and continued personal growth.
Financial preparedness is the gateway to retirement freedom and the antidote to retirementphobia. Accumulating the resources boomers believe they need for retirement freedom (81 percent), rather than age (56 percent) or any other variable, was cited as the most decisive factor for when they choose to retire. And, recognizing the growing uncertainty of government entitlements, boomers who have a plan and feel prepared are twice as optimistic and far less fearful compared with those who do not.
One size doesn't fit all. When it comes to retirement dreams and preparedness, there are five distinct and different boomer segments: the 'Empowered Trailblazers,' the 'Wealth-Builders,' the 'Leisure Lifers,' the 'Anxious Idealists' and the 'Stretched and Stressed.' The survey revealed how each group is doing, their plans and ambitions for later life, their level of financial preparedness and how they intend to fund their future dreams. All this will have significant financial planning implications. By rejecting traditional retirement and planning to work or cycle between work and leisure, boomers will have increased earning, savings and investment compounding years. And they will not have to tap retirement savings as their primary source of income until much later than is usually promoted.
"Boomers pioneering this 'new retirement' can readily attain their financial goals. It starts with savings, but it requires a new planning model that considers all of the elements of their retirement dream, as well as their total financial picture," said Michael Falcon, chief operating officer of the Merrill Lynch Retirement Group. "This new approach to retirement offers individual investors and retirement plan participants significant benefits as they can take advantage of additional years of compounding investment returns and fewer years of distribution; thereby making retirement savings goals more attainable." The report's findings were based on a telephone survey of 2,348 US adults aged between 40 and 58 conducted for Merrill Lynch by Harris Interactive between 5 February 2004 and 1 March 2004. Source: thewealthnet.com – 28 February 2005 |
