New White Paper Finds That Many Boomers Fear Retirement Poverty

May 26, 2011
Carol Finch

Many Baby Boomers Worry About Retirement Income - Photo by cohdra

A white paper released by the investment advisor Financial Engines shows that almost half of Baby Boomers worry about the future and poverty in retirement.

A white paper released by Financial Engines on May 23, 2011 (Understanding the Accidental Investor) details the thoughts and concerns of Baby Boomers as they reach or approach retirement and assess their financial futures. How is this generation facing later life?

Baby Boomers Are the First Generation of 'Accidental Investors'

This white paper took three years of research between March 2008 and February 2011. It is based on one-on-one interviews with 300 people who are close to retirement or who have already retired. Unlike many other projects it was based on qualitative research that surveyed emotions and behavior rather than specific data on retirement planning.

Baby Boomers face new problems compared to previous and future generations. Labelled as 'accidental investors' by the firm, they have seen the way that they save for retirement change in their lifetime. Many may have started work with an employer taking care of their pension only to have to then take on responsibility for their own retirement planning via products such as 401(k)s later in life.

How do Boomers View Their Financial Prospects in Retirement?

Almost half of the 300 participants worry about retirement poverty and more than half feel that their futures are uncertain. Nearly half feel unable to trust financial services/insurance firms and more than a third are not sure that they have the confidence or knowledge to make appropriate investment decisions. These worries are also being noted elsewhere. A recent AARP Public Policy Institute report that polled 5,000+ older workers found that over half are concerned that they won't have enough money in retirement.

How Can This Research Help Meet the Needs of Baby Boomers?

Looking at how people feel about retirement planning and the issues that worry them could be used by sector professionals as a means of improving service provision. In a report on the white paper ("Baby Boomers' Emotions Threaten Retirement Security, Financial Engines Analysis Shows", May 23, 2011), the firm's director of retiree services, Shin Inoue, states that: “Meeting the retirement income needs of this generation starts with the development of solutions that addresses their emotions. Only then will we be able to help accidental investors achieve the retirement security they seek and deserve.”

Factors highlighted here include addressing trust issues by giving people advisors who could help work with individual needs and circumstances. Many would feel more comfortable with a professional or firm that had been chosen and that was subsequently monitored by their employers. Fee transparency, investment flexibility and safety were also highlighted in the report.