Baby boomers have to picture retirement |

Baby boomers have to picture retirement


As a follow up to last week’s column on how baby boomers have shifted their financial priorities, this week we take a look at sources of retirement income and what the future might hold for the baby boom generation. The 2003 AXA Nest Egg Study revealed that there is a new focus on retirement planning, an increase in financial sophistication and a greater belief in the American dream of success among baby boomers as compared to the results of the original study in 1993.Retirement incomeOnce in retirement, what do baby boomers see as their sources of income? An increased number of them placed a high importance and expectation on their employer’s pension plan (57 percent in 2003 vs. 40 percent in 1993) and privately created financial plans (49 percent in 2003 vs. 33 percent in 1993) as sources of retirement income. Those who have prepared well for retirement are most likely to place a high importance on privately created financial plans as a source of retirement income with many citing this as the most important source.Although respondents did not characterize Social Security as a key source of retirement income, they did indicate that it had some importance in planning for retirement (56 percent in 2003 vs. 44 percent in 1993.) Those who have done little planning for retirement are most likely to rely on Social Security and most likely to believe they will have to sell their home in order to maintain their lifestyle in retirement. These findings are mirrored in respondents who reported not having a financial plan. On their ownAs they age, chances are that married baby boomers may find themselves on their own. In the AXA 2003 Nest Egg Study, a large majority of participants acknowledge that their own lifestyle would decline upon the death of their spouse (87 percent) and that their spouse would experience a similar decline in lifestyle upon their death (82 percent). Women especially believe that their lifestyle would change dramatically upon the death of their spouse.Respondents with less than $100,000 in household income who do not have a financial plan are more likely to believe that their premature death would negatively affect their spouse’s lifestyle.Looking to the futureDespite the political and economic events of recent years, nearly three-quarters of participants in the study believe, “the American dream of success is alive.” This increased by 16 percent from 1993, when 58 percent believed this to be true. As with generations before them, more baby boomers believe the future will be better for their children. Most participants (53 percent) believe their children have a realistic chance of being better off financially than they are, which is an increase from 41 percent in 1993.As the baby boom generation continues to mature, financial needs, goals and expectations will evolve and change. Results from AXA’s 2003 Nest Egg Study indicate that this process is under way. Preparing financially for retirement has become significantly important for the generation that declared it would never trust anyone over 30. Having adequate resources in retirement has replaced paying for children’s college education as the single greatest economic concern for a considerable portion of baby boomers. Compared to 1993, more baby boomers expect to assign a higher priority to providing a financial base for retirement. Yet some things haven’t changed. In 1993 and 2003 over 60 percent of respondents reported they had a formal financial plan. Results further indicate that having a plan means a greater likelihood of achieving financial goals. Overall, baby boomers seem to be anticipating retirement and have begun to face the task of building a nest egg for their future. Jeffrey Apps and Tracy Tutag offer securities and investment advisory services through AXA Advisors, LLC (member NASD, SIPC) 1290 Avenue of the Americas, New York, NY 212-314-4600 and offers annuity and insurance products through an insurance brokerage affiliate, AXA Network, LLC and its subsidiaries. They can be reached locally at 926-0601 or

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