The 2017 Boomer Expectations for Retirement survey from the Insured Retirement Institute reveals that things are not really improving for Boomers as they move into and toward retirement. There are more than a few disturbing statistics to share.
I recommend you follow along with the report as you listen to this week's episode, it will make it much easier to digest the information we're sharing.
You can find the survey results by clicking here.
In the seven years since the survey was started with boomers aged 54-70, the trend is not improving. It seems that as a whole, boomers are not growing more confident in their ability to provide a comfortable retirement for themselves.
Something worth thinking about…
Their confidence is declining in the face of a massive run-up in the stock market since March 2009. Take a look at this chart of SPY (ticker symbol for a popular S&P 500 ETF) returns since the last market bottom:
So, why all the misery? Why are such a large percentage of boomers indicating that Social Security will provide their only reliable source of guaranteed income?
There are a few disconnects here in terms of what people say they want and what they actually do. I'll let you read the report to pick out all of them, but it is worth pointing out one in particular that leaves me scratching my head.
On page 17, the study reveals a major problem with how people plan to actually fund the income gap in retirement, the following statement shines the light on a serious problem:
When it comes to accessing their savings, two-thirds of Boomers say they plan to withdraw funds as needed for basic expenses, or for emergency or discretionary spending needs. Conversely, only 8 percent plan to transfer a portion of their defined contribution savings to an annuity. This leads to one of the most interesting findings in this year’s study: while only 8 percent will consider using their retirement savings to fund an annuity, 85 percent of Boomers say that it is very or somewhat important to have a source of guaranteed lifetime income besides Social Security.
Clearly, annuities are not the solution to every problem. I believe that if you described all the things an annuity with an income guarantee can do for people they'd think it was miraculous. The problem comes when you say the word “annuity”.
And heaven forbid anyone go to Google and search for information about annuities–they'd be left with the impression that anyone offering or speaking positively about the benefits of an annuity is obviously a conman. Sad that the narrative of guaranteed income is being controlled by misguided financial pornographers.
I'm not aware of any other way that an individual can create a guaranteed lifetime income besides using some sort of annuity.
Look, this isn't the only problem most of the study participants revealed, not by a longshot but it does reveal to me that we've gotta do a better job of getting the truth out there. We need to help people focus on what they need, how to get there and decrease the dependence on social security. It's never a good idea to place your hopes of retirement security in the hands of politicians.