Retirement: Baby Boomers Are Loving It – On Less


Flickr / pedrosimoes7.

Though many worried that the Great Recession would put a damper on baby boomers' retirement plans, this seems not to be the case. A new study by T. Rowe Price shows that not only are boomers enjoying their golden years, but they are doing it with less money than financial analysts thought possible.

Faring well, with less
The survey encompassed more than 2,500 respondents, approximately 40% of whom were at least 50 years of age, and still working. Interestingly, it was this group that exhibited more concern regarding retirement, voicing worries about having to drop their standard of living or running out of money.

Still, these boomers are quite well prepared. Median household assets are a robust $465,000, and 61% feel that they will be able to plump that number further to $693,000. In addition, 60% do not feel that they will have to use their home equity to make ends meet after they stop working.

When it comes to those who have already entered retirement, the situation looks better still. Of those retired for almost three years, 89% were at least somewhat satisfied with their situation. More than 50% reported living at least as well as when they were working, even though they are living on a mere 66% of their former income.

Planning is key
This is amazing, especially since most financial analysts – including T. Rowe Price – recommend saving enough to support spending 75% of pre-retirement income once you retire. The best part is that these retirees are living it up on a median household asset level of $473,000 – a smidge less than the still-working boomers already have saved up for their own retirement years.

How are they managing this feat? One big factor seems to be flexibility, whereby retirees adjust their spending depending upon the market. Although nearly half have a withdrawal plan and have not withdrawn more than 4% annually from their retirement portfolios since they retired, they prefer to spend less rather than take a chance on reducing the value of their portfolio.

Another reason that these retirees are doing so well is that they have planned well. Having a retirement plan – and saving early – will put you at the head of the class when it comes to having a comfortable, satisfying retirement.

Some recent research from Boston College's Center for Retirement Research shows just how important this aspect can be. Though the paper acknowledges that half of families today may face a less-than-stellar retirement, it offers a smart and simple fix: save 15% each year for 30 years. Saving more money for longer spans of time will give you more, as will working past age 65.

For middle-income households, this supplementation of Social Security benefits and pensions should allow for a post-retirement income that is 71% of what families made when they were working. This plan, it seems, should almost guarantee a super-comfortable retirement.

The rub, of course, is actually coming up with such a plan, and sticking to it. If you feel that you cannot realistically save 15% annually, then save 10%. The point is to do something, even if you think you are not doing enough. After all, those retirees living well on about two-thirds of their prior income were likely told that they would need about 10% more to do so. When it comes time for your own retirement, you may be pleasantly surprised by the efficacy of your own plan, as well.


Read/Post Comments (3) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 03, 2014, at 4:21 PM, HarryGr wrote:

    Downsizing, frugal living, home sharing and less costly retirement locations can all provide for a comfortable retirement. The site Retirement And Good Living provides great information on all these topics and many others including health, part time jobs, volunteering, travel and more.

  • Report this Comment On August 04, 2014, at 9:51 AM, sfbmoore wrote:

    Think Shared Housing as a way of reducing housing costs during your golden years! It also provides great companionship. GoldenGirlsNetwork.com is a great resource for finding mature roommates. We teach a workshop called "How to Start a Golden Girls Home." Free workshops in August!

  • Report this Comment On August 04, 2014, at 12:28 PM, dpi45 wrote:

    Funny , you have this article ,

    2 articles above this is this article.... whom to believe ...smh

    Not so golden: Wealth gap lasting into retirement

    Not-quite-golden years: As traditional pensions fade, wealth gap widening into retirement

    .

    Associated Press

    By Michael Hill, Associated Press 2 hours ago

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3054269, ~/Articles/ArticleHandler.aspx, 9/22/2014 4:22:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement