Boomers and bust
April 25, 2014 by Steven Lang
Caregiver Warren Manchess helping Paul Gregoline leave the bedroom, in Noblesville, Ind. (AP Photo/Darron Cummings)
For years, it’s been said the baby boomer generation is going to set in motion the largest wealth transfer in American history. Now, I’m thinking, maybe not so much.
The Insured Retirement Institute – in its report “Boomer Expectations for Retirement 2014: Fourth Annual Report on the Retirement Preparedness of the Boomer Generation” issued this month – found that “while more may be planning for retirement, fewer Boomers in 2014 believe leaving an inheritance to loved ones is important. In prior years, around two-thirds of Boomers believed this to be important, while only 46 percent of Boomers shared this opinion in 2014.”
That’s roughly a 20 percent drop off. Concurrently, the institute also found that confidence in retirement expectations is falling slightly – from 37 percent to 2011 to 33 percent in 2014.
Way more mind blowing, however, was that this year’s research showed a marked increase in, let’s call it pessimism and fear, among those who feel they have “little-to-no confidence at all” in their retirement plans and outlook. Among them, 29 percent don’t think they’ll have sufficient assets to live comfortably in retirement, up 10 percent from 19 percent in 2013. And those with little-to-no confidence in their retirement preparations grew to 31 percent in 2014, a 9 percent jump, from 22 percent in 2013.
So, what about the fact that fewer people believe in the sanctity of inheritance while more people are freaking out that they won’t have a pot to, you know, in. Coincidence? Methinks not. I think the tide is turning. I’ve had conversations on and off with friends for years in which we discuss the very real possibility that, after the final count is in, Boomers might have had it better off that their kids.
The IRI report didn’t have much to say about any correlation between increased pessimism and a decreasing Boomer belief in the sanctity of inheritances. So I called them up to find out what they thought. Here’s what IRI President and CEO Cathy Weatherford had to say about my theory.
“Overall, in a number of areas in the study, we saw evidence that Boomers are finally grappling with the important questions regarding their financial security in retirement. But as they deal with these issues, I believe many Boomers are seeing a large gap between where they are in terms of savings and where they want to be during their retirement years,” she said. “As a result of this gap, we are seeing fewer Boomers who are highly confident in their retirement prospects. This also could be why leaving an inheritance has dropped in importance. Boomers are realizing they are falling short of the retirement they had hoped for, and making up this shortfall is now their principal concern.”
I feel bad for our offspring. So do you, I bet. Enough for you or your clients to forego that luxury boat? Absolutely. Enough for either of you to say so long to a more reasonable but still optional expense like a yearly vacation to take that much-needed break? That’s a tougher question.
