Boomer Middle Class: 71% Worry About Outliving Money During Retirement

The economic downturn has forced 73% of middle class Baby Boomers to rethink when they can retire, with 79% saying they will delay retirement by an average of five years according to a new report from Bankers Life and Casualty Company Center for a Secure Retirement (SM) (CSR).

The study focused on 500 middle-income Americans between ages 47 and 65 with income between $25,000 and $75,000, found that one in seven (14 percent) believe that they will never be able to retire due to the turbulent economy.

Several factors have contributed to the shift in retirement outlook, with 71% worrying about outliving their money once they retire.  Another 68% said they experienced a decline in the value of their retirement accounts within the past three years and more than half (55 percent) have saved less than $100,000.

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In light of the recent decline in the economy, working in retirement is fast becoming a new reality for many middle-income Americans.  The CSR’s study found that three out of four (75 percent) expect that their retirement will involve work in some form and more than half (57 percent) say that they will have to work for financial reasons.

While most people expect that they’ll be able to choose when they retire, two-thirds (64 percent) of survey participants are concerned about being forced to retire, most commonly due to loss of employment (44 percent) or failing health or disability (40 percent).

“Whether you hope to retire in five or 15 years, it’s not too late to create an achievable plan,” said Scott Perry, president of Bankers Life and Casualty Company, a national life and health insurer. “Middle-income Boomers should take full advantage of the retirement savings opportunities through their employer or a professional advisor, reduce financial debt, practice healthy living and help insure against life’s uncertainties, whether it’s health costs, long-term care or out-living one’s savings.”

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View a copy of the study here.

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  • I’m suspicious of any insurance company study, but as a retired insurance guy, I can say I love the idea that the annuities I sold myself are providing  my wife and I with an income we cannot outlive.  Some people sleep better if they have a guaranteed income, such as a pension, SS, and an annuity.  (Those that struggle into old age still juggling their portfolios may tend to worry more.)  That is why I love the tenure-life payouts of an RM.

    • dduck12,

      I know you are not in the industry but we need to be careful with what we tell you.  Tenure payouts only last as long as the loan stays in place which could be as long as the life of all borrowers.  Annuities are portable; HECM payouts are not.

  • I’m suspicious of any insurance company study, but as a retired insurance guy, I can say I love the idea that the annuities I sold myself are providing  my wife and I with an income we cannot outlive.  Some people sleep better if they have a guaranteed income, such as a pension, SS, and an annuity.  (Those that struggle into old age still juggling their portfolios may tend to worry more.)  That is why I love the tenure-life payouts of an RM.

  • dduck12, While I am not so sure what “equity” release really is since a HECM is a mortgage or what income has to do with loan proceeds, tenure payouts are calculated in a manner similar to annuities except the life expectancy is based on the youngest borrower living to 100 and the interest rate used is what the HECM program defines as the “expected” interest rate.  Also the principal amount equals the lesser of the amount which the borrower has indicated to be allocated to tenure payouts or the amount which would otherwise be available in the line of credit without the tenure payouts as of the time of tenure payout calculation.  It is a rather simple calculation once one understands some of the technicalities such as what the age of the youngest borrower is in “HECM speak” and the assumed start date of the payouts.  Our language is a little different than that of the world of annuities. The monthly cash stream flowing from the tenure payout calculation can last unchanged until the loan terminates.  However, it must be pointed out that the lender can lower the tenure payout amount without the permission of the borrower if funds must be used for such things as protecting the position of the note holder or HUD due to default or to defend their relative lien positions.   Tenure payouts are not annuities even though their computation is “annuity like.”  They are nothing more than a guaranteed payout as long as certain covenants are not violated.  Despite some of the nonsense stated otherwise, neither HECMs nor their guarantees terminate just because borrowers declare bankruptcy or start into bankruptcy proceedings BUT all HECM payouts get suspended and access to the line of credit also gets suspended. When it comes to tenure payouts it PAYS to read and understand the fine print.

    • Remember selling 101, KISS (Keep It Simple Stupid).  All I can say is IF I am taking a HECM, I personaly would prefer the tenure payments, caveats and all.  Equity Release, I beleive, is how some other country labels their RM program.  BTW: I currently have two immediate annuities, converted from deferred ones, and will be adding another three IAs in the future.  That being said, I feel in my particular circumstance, and depending on the comparison of payout figures from a Joint and Survivor 100% annuity and the current tenure figures, again J&S 100%, I can see which I would prefer for HECM proceeds (I would not want a lump sum or line of credit).  The equity in my home is of no use to me, so I could see using a HECM to produce cash flow.
      No heirs, no problems. 
      BTW: I don’t think anyone knows how many people are in homes/apartments in the same general situation.

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