Guideline study reveals Boomers unprepared for retirement and concerned rising health care costs may deplete savings

NEW YORK, March 27 /PRNewswire-FirstCall/ -- With retirement approaching fast, Boomers between the ages of 40 - 60 years old are concerned that, despite planned inheritances, they will not have enough money to retire comfortably. Revealed today as part of a national study by Guideline, the nation's only single-source provider of customized business research and analysis, less than a quarter of Boomers surveyed said they are extremely or very confident about their retirement plans.

Guideline's consumer study surveyed 500 consumers born from 1946 through 1964, who have either received an inheritance or expect to in the future. In addition to the quantitative interviews, qualitative questioning of 30 respondents was conducted. The Boomers were divided evenly into two groups: First Wave Boomers (FWB) ages 50-60 and Second Wave Boomers (SWB) ages 40-49. All of those surveyed had primary or shared responsibility in financial decisions, not currently retired from their primary job and are not full-time students.

"Prior to the study, it may have been assumed that Boomers retirement plans would be bolstered by the transfer of inter-generational wealth. However, the opposite was found to be the case," said Peter Hooper, managing director, Guideline Market Research. "Boomers actually view their inheritances as a small 'bonus' to their retirement plans, and find themselves in the same position as other Boomers approaching retirement -- nervous they may not have enough money for their golden years."

Central to Boomers' lack of confidence was their fear of declining health in their later years and their ability or inability to pay for health care. There is an underlying concern that a total re-evaluation of retirement plans would be necessary if health deteriorated. Despite this concern only 18 percent of FWBs had long-term care and only 24 percent expect to get long-term care in the near future. SWBs responded similarly.

When specifically asking about their current or future inheritance, Boomers said they expect only 10 - 11 percent of their monies for retirement to come from their inheritance. In addition, among the 64 percent of Boomers who responded to the question about the amount of inheritance they planned on receiving, the median inheritance is approximately $100,000. When asked how they expected to use this inheritance, not surprisingly, they volunteered being debt-free, using the money to pay children's education, vacations and growing the remaining funds through investments.

Related to funding retirement, FWBs expected to need approximately $375,000 (median value) in savings aside from Social Security and employer- sponsored pension plans to meet their retirement goals. SWBs expect they will need significantly more ($750,000) in their personal savings.

Where their retirement monies would come from revealed that FWBs expect 32 percent to come from personal or 401(k) type savings plans, 22 percent from Social Security and 14 percent to be derived from part- or full-time work (vs. SWBs expect 38 percent from personal or 401(k)s, 18 percent from Social Security and 11 percent from part- or full-time work). The remaining monies were attributed to inheritances, future sale of a home or other income.

"The breakdown of the Boomers into two groups proved to deliver some very interesting results," added Hooper. "There are distinct differences between those aged 40-49 and 50-60 years old with relation to the timing, activities and money needed for retirement."

Additional findings about the activities they hoped to enjoy during this time of theoretical relaxation included:

  * 85 percent of FWBs planned to work, while only 74 percent of SWBs had such ambitions

  * When asked why they planned to work, 33 percent of FWBs said because they enjoy it, while 34 percent said they needed to in order to make ends meet (versus 29 percent and 29 percent for SWBs, respectively)

  * 18 percent of SWBs said they will not work because they plan to enjoy a comfortable lifestyle during retirement (versus only 8 percent for FWBs)

  * Surprisingly, only 1 percent for both FWBs and SWBs said they will not work because they expect an inheritance