Financial Security to Retired Boomers May Be Different than to Other Generations

Healthcare Costs, Inflation Cited as Major Challenges to Accumulation and Budgets

Financial Stress in Retirement Is Same or Greater than During Boomers’ Working Years

A new survey unveils fresh insights into the retirement experiences and financial preparedness of baby boomers who retired in the past two to five years, along with some practical advice from respondents for future retirees. At first glance, retired boomers appear to be a contented lot, with many reporting that their financial situation in retirement is “better” or “as they anticipated” and that they don’t need to "unretire" and start working again due to economic necessity. Those responses, however, are counterbalanced by significant challenges, including adapting to fixed incomes, coping with rising living costs, feeling socially disconnected, and managing healthcare expenses, along with a heavy reliance on Social Security as a critical income source.

The survey was commissioned by retirement industry fintech provider IRALOGIX and was conducted in May 2024.

“The survey's findings provide a comprehensive view of retired baby boomers' financial and social conditions, as well as the hurdles they face in navigating retirement," said Peter J. de Silva, CEO of IRALOGIX. “Retired boomers have a unique perspective on financial security compared to other generations. They rely strongly on early and proactive retirement saving, and the importance of stable, dependable income sources like Social Security and traditional monthly pensions. Unlike younger age groups, boomers appear to view financial security as not just about accumulating wealth but also about managing unexpected costs and ensuring long-term stability. This approach reflects their resilience and adaptability, offering valuable insights into prudent financial planning and the importance of preparing for life's uncertainties, providing invaluable lessons for future retirees."

Key Findings:

• High Confidence in Financial Preparedness: Over half of the respondents (54%) expressed being "highly confident" or "confident" about their financial readiness for retirement. A significant 73% reported that their financial situation was "much better" or "just as they anticipated" before they retired.
• Varied Retirement Income Sources: Social Security is the primary source of retirement income for 36% of respondents, the most frequently cited source among respondents. Other significant sources include traditional monthly pensions (16%) and employer-sponsored retirement plans (15%). Other responses included investments, IRAs, and outside savings.
• Dependence on Social Security: When asked how dependent they are on Social Security for monthly expenses, 34% of respondents rated their dependence as "highly dependent" (5 on a 1-5 scale). A further 37% ranked their dependence 3 or 4, indicating medium to strong reliance on their monthly Social Security checks. Just 14% said they were “not at all” dependent on Social Security.
• Early and Proactive Savings: A majority (56%) began saving in earnest for retirement between the ages of 25-40, emphasizing the importance of early financial planning. Conversely, 16% of respondent either started saving for retirement after age 60 or went into their retirement without any savings at all. 54% managed their accumulation strategies, while half that number (27%) relied on financial professionals to help them plan for retirement.
• Confidence in Longevity of Savings: 57% of respondents believe it’s "not at all likely" they will run out of money during their retirement years. However, 26% think it’s "somewhat likely," and 9% say it’s either "highly likely" or they’ve "already run out of money."
• Smooth Transition for Many: More than half (55%) encountered no unexpected obstacles during their savings accumulation phase. For those who did face challenges, issues included health-related problems and expenses, market volatility, family obligations, and changes in employment status.
• Advice for Future Generations: The surveyed retirees emphasize the importance of early and consistent savings, with 45% advising younger generations to establish a retirement savings plan as soon as possible and adhere to it diligently. Other advice included “Pay off as much of your debt as you can before you retire; you don’t want to take it into retirement with you” (19%), and “Set specific retirement goals early on and factor them into your savings plan” (12%).

Other Takeaways

• Who’s to Blame?: 26% of retired boomers blame themselves either for running out of money in their retirement or for the possibility of quickly depleting their financial resources (“I didn’t start saving early enough or save enough”), 16% blame the government (“my Social Security is too low to meet my financial needs”), and 15% point to healthcare costs (“they’re much higher than I expected”).
• What, Me Worry?: 50% of survey respondents feel financial stress and worry in retirement on par with their working years.
• Challenges in Adaptation: Adjusting to a fixed income presents significant challenges for some retirees. The increasing costs of living, including healthcare expenses, were noted by 29%, while 17% cited the erosion of purchasing power due to inflation.
• Retirement Activities and Satisfaction: Many retirees are enjoying their free time as planned, with 58% doing exactly what they intended in retirement, while 23% have accomplished some of their goals but say their income is “preventing them from doing the rest.” Popular retirement activities include traveling (25%), spending time with family and friends (13%), and just enjoying their downtime (13%).
• Leaving Some Behind: 28% of boomers plan on leaving an inheritance for their heirs and they’ve actively set aside funds. This compares to 21% of respondents who plan to use all of their financial resources during their retirement years and 34% who are undecided.
• Biggest Surprise: 20% of boomers what surprised them most about their retirement is “the joy they get from pursuing long-delayed passion and interests.” Right behind that, 19% of respondents noted “the amount of free time they had available and the challenge of filling it productively.” Other responses included “feeling socially disconnected, unengaged, and isolated,” and “the impact of healthcare costs on budgets, even with insurance.”

"Boomers might be among the last generation to enjoy reliable, guaranteed income sources like Social Security and monthly pensions," de Silva noted. "This signals to younger generations the urgency of saving for retirement independently of these disappearing income streams. The importance of early financial planning and preparing for unexpected expenses cannot be overstated."

Methodology

The survey was conducted online in May 2024 on behalf of IRALOGIX. Respondents, who skewed 53% female to 47% male, were drawn from a national sample of retirees ages 60-69 with household incomes of $0 - $200,000 plus. To schedule an interview, or for a copy of the full survey results, please contact Scott Sunshine.

About IRALOGIX™

IRALOGIX is redefining the $13 trillion IRA marketplace through its industry-leading technology-enabled, fully paperless, white-label IRA record-keeping and technology solutions. The company’s proprietary technology solutions enable any financial institution to easily customize its IRA offering and compete effectively in all segments of the IRA market, regardless of account size. Through modular technology, institutional clients have the choice to use their internal investment or advisory capabilities or select from key industry-leading providers. IRALOGIX complements your market strategy, streamlines your IRA service options, and helps you expand your business across all segments of the industry, profitably. For more information, please visit www.iralogix.com.

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