Individuals born between 1946 and 1964 are the generation coined Baby Boomers. They are often a difficult group to analyze, as they account for a variety of life stages, from single to married with kids to empty nesters. Around 25% of Baby Boomers are confident that the money they have saved will last them through retirement, according to the Insured Retirement Institute (IRI). Taking a look at your retirement fund, how do you measure up to other Baby Boomers?
Reliance on Social Security
Over 50% of Baby Boomers are relying on Social Security as one of their most significant sources of income for retirement. Majority of Baby Boomers do not have enough money saved for retirement, statistically speaking, and are not staying on top of managing their accounts. Two major concerns for nearly 80% of individuals are the changes to Social Security that will negatively affect their income and the impact it will have on their health care expenses due to the unpredictability.
Failure to Manage Accounts
More than 50% of Baby Boomers do not regularly review or manage their accounts. Around 80% of individuals will review their accounts quarterly; only about half of them will analyze and rebalance their accounts. This should be conducted yearly, at the minimum.
Withdrawing from 401(k) Early
About 40% of Baby Boomers plan on withdrawing from their 401(k) early. In the world of financial planning for retirement, this is the biggest no-no there is. Your 401(k) is designed to pay your income for the remainder of your life and is principal protected. Withdrawing early will result in you being heavily taxed and hurting you in the long run. Additionally, only about 22% of Baby Boomers consider their 401(k) to be the primary source of their retirement income.
If you find any of these statistics resonating, just know that it is never too late to reevaluate your retirement savings. Talk to a retirement planning specialist or advisor to help you develop a plan and become more confident in your retirement savings. The difference can be significant; 80% of Baby Boomers that worked with a specialist or advisor saved at least $100,000 for retirement compared to the 48% that haven’t worked with anyone according to the IRI.