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Finances » Adequacy of Retirement Savings

Why It's Important

American households do not save in any systematic way, and personal saving rates have declined by nearly half since 1970. Government efforts to encourage more personal retirement saving seem to have had only marginal effects. Preferential tax treatment for IRAs and 401(k) accounts seems to encourage saving in these vehicles, but they may not necessarily represent totally new saving. Some contributions may merely have been shifted from other forms of saving. Furthermore, low-income families may find it especially difficult to save, and most public assistance programs penalize private saving by requiring low levels of financial assets in order to qualify.

 

How Richmond Is Doing

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How Virginia Is Doing

  • Four in five boomers (82%) have done some financial planning for retirement (ODP RESIDENT, 2009)
  • Which means that one in five (18%) has not done any financial planning for retirement (ODP RESIDENT, 2009)

Four in Five Boomers have done some financial planning for retirement, Virginia

How the U.S. Is Doing

There are significant viewpoint differences between older Boomers born in 1946 and their younger counterpart born in 1964 according to The MetLife study entitled, Boomer Bookends: Insights Into the Oldest and Youngest Boomers.

Older Boomers born in 1946:

  • About one in five have delayed collecting Social Security
  • Few have fully retired (19%)
  • Only 13 percent have saved fully for their retirement and another 25 percent say they are on track to do so; a leading concern is affordable health care
  • About two-thirds of the Oldest Boomers remain in the work force, 50 percent full-time
  • Almost six in ten have provided financial assistance to their children and grandchildren, perhaps putting their own plans at risk
  • It is seen as an unexplained contradiction that a large portion (24%) say they have no concerns about retirement, across income levels
  • They say they will consider themselves "old" at age 78.
  • Oldest Boomers will rely on defined benefit pensions for their retirement income along with Social Security

Many in the youngest group born in 1964:

  • 4.6 million people
  • Say they will consider themselves "old" at age 71
  • They want to retire by age 64, but believe they will not be able to do so until age 65, though they will not be eligible for full Social Security retirement benefits until they are 67
  • Only 36 percent say their retirement savings plans are on schedule and a good deal express concern about outliving their money
  • This group expects to depend largely on the funds in their 401(k)s along with Social Security rather than pension plans

(METLIFE, BOOMER BOOKENDS, 2009)

According to a paper by AARP's Focalyst entitled, Busting Boomer Myths How Well Do You Know Boomers? Counting Down the Top 10 Boomer Myths:

  • Only 11% of Boomers are planning to stop working entirely when they reach retirement age.
  • 2/3rds of Boomers are already certain of their retirement plans -- with more than 8 in 10 planning to work or actively volunteer.
  • Boomers aren't all wealthy. Boomers are the wealthiest generation in history, but only 9 percent are truly affluent (defined as having pre-tax incomes of $150,000 or more if working, or $100,000 or more if retired.) In fact, 25 percent do not have any savings or investments at all.

(AARP, FOCALYST, 2008)

Data & Information Sources

AARP, Focalyst, Busting Boomer Myths How Well Do You Know Boomers, 2008

https://www.focalyst.com/Sites/Focalyst/Media/Pdfs/en/CurrentResearchReports/707070D2.pdf

Federal Interagency Forum on Aging Related Statistics

http://www.agingstats.gov/agingstatsdotnet/main_site/default.aspx

MetLife, Boomer Bookends, 2009

https://www.metlife.com/assets/cao/mmi/publications/studies/mmi-studies-boomer-bookends.pdf

Older Dominion Partnership, Resident Study, 2009

http://www.olderdominion.org/documents/ODP_Exec_Sum_03_26-08.pdf

U.S. Census Bureau, American Community Survey

http://www.census.gov/acs/www/