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Baby Boomers Worried They Haven’t Saved Enough for Retirement

Updated Jul 06, 2023

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Dock Treece
Contributing Writer at
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  • It can be difficult to prepare for retirement as a small business owner, but many aging entrepreneurs express fear and regret that they didn’t save more money sooner.
  • There are many ways small business owners can save for retirement, as well as myriad retirement saving strategies they can employ.
  • Learn more about what you can do now to prepare for retirement, or consider our picks for the best employee retirement plan providers to find the right option for you.
  • This article is for entrepreneurs and small business owners who are thinking about retirement or need ideas on saving for retirement.

As workers age, the expectation is that they will eventually give up their careers and settle into their golden years as retirees. Getting to that point, however, takes years of financial planning. Without proper preparation, workers may not be able to afford retirement. Instead, they may need to continue working well into their 60s and 70s, leaving fewer years to relax after a long career.

A recent study commissioned by the Insured Retirement Institute (IRI) suggests that baby boomers approaching the twilight of their working years feel increasingly anxious about retirement. This may also explain why many retired Americans expect to keep working at least part time after retiring from their careers.

The study surveyed more than 800 Americans ages 56 to 72 and was conducted online between Feb. 11 and 15 of 2019. 

According to the survey’s findings, 45% of boomers haven’t saved toward retirement at all. Of those who have saved for the future, more than half have saved less than $250,000 for retirement.

Editor’s note: If you’re looking for information to help you choose an employee retirement plan provider for you or your business, use the questionnaire below to receive information from a variety of vendors for free.

Underestimating future costs

When budgeting, it’s important to know how much something will cost – not just now, but in the future. Big-ticket items like cars and houses are easier to estimate, since options are available across a wide price range. But how do you prepare for the possibility of something going wrong when you retire? How can you know exactly how much money you’ll need?

According to the U.S. Bureau of Labor Statistics, the average Social Security income of a retired worker is approximately $18,600 a year. However, retired Americans ages 65 to 74 regularly spend at least $55,000 a year. Just 30% of respondents in the IRI survey believed they would need $55,000 or more annually in retirement.

One major cost for retirees is healthcare insurance. According to the survey, baby boomers’ expectations may not quite match with reality, especially in light of new risks like COVID-19.

More than 50% of respondents said they believed their healthcare costs would take up 20% of their retirement income. The IRI study, however, cites a HealthView Services report that estimates a “healthy 66-year-old couple will need 48% of their lifetime Social Security benefits to address healthcare expenses.” 

Key TakeawayKey takeaway

Almost half of the boomers surveyed said they believed Medicare would cover long-term health costs, even though that’s not the case.

Retirement funds and longevity

Along with concerns that they hadn’t saved enough, boomers are worried that they’ll outlive their savings. According to the survey, 80% of respondents said it was either “very important” or “somewhat important” that their retirement income be “guaranteed for life.”

That wish is becoming less and less likely, as pensions are rarer than they used to be. According to a CNN Money report, “the percentage of workers in the private sector whose only retirement account is a defined benefit pension plan is now 4%, down from 60% in the early 1980s.” Current trends show that particular benefit continuing to lose favor among employers in the coming years.

One thing that the IRI says boomers can use to provide a “protected lifetime income” is annuities. According to their survey, two-thirds of boomers who reported not having an annuity cited “insufficient savings or lack of knowledge” as a reason for not having one.

While annuities may be attractive, they are not for everyone. Annuities are regularly set up in ways that can become much more expensive than other investment options.

Respondents with a financial advisor and/or an annuity felt more confident about their retirement preparedness and were 2-3 times more likely to feel they’d done a good job planning for retirement. They also felt more confident that their retirement “will last at every age milestone from 75 to 90 years.”

The impact of the COVID-19 pandemic on small business owners’ retirement

Of course, the world has changed dramatically since the IRI survey was conducted. A new administration has entered the White House and, more significantly, a pandemic has swept the globe, leading to economic shutdowns, layoffs and global supply chain problems. Learn the differences between a layoff and a furlough.

Among the innumerable impacts of COVID-19, its fallout has caused many Americans to rethink their finances and their prospects for retirement. Many who were already near retirement age have had to reconsider the timing or circumstances of their retirement. 

Thankfully, while the economy and financial markets suffered an initial shock when COVID-19 reached our shores, asset prices have largely recovered, and even marched to new highs in both stock and housing markets. 

So, while Americans were initially set on edge – and some suffered significantly during the early stages of the pandemic – many have since recovered, at least financially. But the pandemic’s impacts go well beyond portfolio values. 

The past 24 months have led many to think more carefully about their finances and the broader direction of their lives in careers. A great number of Americans have suffered financial setbacks and have settled on a more cautious tack as they head toward retirement. 

Others have gone the opposite way, realizing that they’re putting off precious time with their families for a future that may be uncertain. This has contributed to what is being called the “Great Resignation” – a term coined as millions of Americans look to abandon their jobs amid uncertainty surrounding the pandemic.

While many resignees will simply be changing jobs, some have decided to step away from jobs earlier than they’d planned, even if that means taking work with them into retirement.  

What you can do to prepare for retirement

Looking forward, IRI said there are several things boomers can do to boost their retirement preparedness confidence:

  • Save up. Setting aside money for retirement on a monthly basis is paramount. Those eyeing retirement should take advantage of workplace plans, especially if employers match 401(k) contributions.
  • Follow a plan. Hire a financial advisor, if possible, to establish a retirement savings plan. Professional insight is invaluable, especially in the world of retirement planning, which can be complex and intimidating to many.
  • Chart out expenses. Planning for medical and long-term care costs now, in addition to basic living expenses, can help avoid any unexpected pitfalls in the future.
  • Consider an annuity. Rather than leaving your retirement funds entirely up to the stock market, potential retirees should consider purchasing an annuity that will protect funds and become a steady source of income over the years.

Andrew Martins contributed to the writing and reporting in this article.

Dock Treece
Contributing Writer at
Dock David Treece is a contributor who has written extensively about business finance, including SBA loans and alternative lending. He previously worked as a financial advisor and registered investment advisor, as well as served on the FINRA Small Firm Advisory Board. He previously held FINRA Series 7, 24, 27, and 66 licenses.
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