At a time when nearly 8,000 Baby Boomers are turning retirement age each day, it does not appear that most Baby Boomers (Born between 1946-1964) are ready to retire. Fidelity's research reports the following retirement savings statistics:
- Boomers have $35,000 in median total household personal retirement savings.
- Boomers typically save $2,750 annually for retirement.
- Boomers are on track to replace 59% of their pre-retirement income.
Boomers who save in a 401(k) have an average 401(k) account balance of $80,000.
- 57% of Boomers expect to receive a pension (either own or spouse).
- 22% of Boomers will rely on the sale of their primary home for income in retirement (that was in 2006—these plans are no longer realistic in 2008).
- 69% of Boomers will rely on working at least part-time for income in retirement
- Of the 69% of Boomers expecting to work in retirement:
-- 68% will do so to cover basic expenses.
-- 52% will do so to receive employer health benefits.
-- 23% will do so because they want to stay busy
Based on these retirement savings statistics, the bottom line is this: boomers financial planning for retirement has been inadequate. It's clear that most will need to work during their 'retirement years', will need to annuitize their assets (consume their nest egg for income—see the annuity calculator) and live more conservatively (perhaps in lower costs areas or with more stringent lifestyles) than desired.
Why has this happened and is there a way out? Boomers simply like to spend on goods that make them happy today rather than for their elder years as this retirement savings statistic indicates:Retirement Savings vs Purchases of New BMWs