Eight years into the economic recovery, following the job-and-stock market-clobbering Great Recession, more Americans in their 50s and 60s feel they will be able to afford to retire at some point.
The latest study on the subject from Golden Valley-based Allianz Life Insurance Co. of North America found that more than 70 percent of baby boomers (born between 1945 and 1965) said they feel financially prepared for retirement, up from 58 percent in 2010. Moreover, only 32 percent said uncertainty about their financial future makes it difficult to plan when to stop working. That compares to 50 percent in 2010 who said they were unsure if they could ever retire.
Although nearly 63 percent of Americans fear running out of money in retirement more than they fear death, baby boomers are finally showing signs of optimism about retirement readiness, according to the latest Allianz Life Generations Ahead Study.
This dovetails with a rise in American wealth thanks to the strong rebound in the stock market, in which Americans invest through retirement plans and otherwise, and a rebound in housing prices, also a significant store of wealth.
“The Generations Ahead Study highlights encouraging news for boomers and proves that with proper focus and engagement, anyone can turn around a poor savings situation and start building for a successful retirement,” Paul Kelash, vice president of consumer insights for Allianz Life, said in a statement. “The key for each generation is to recognize that a solid retirement plan doesn’t happen by chance, but rather with a clear process and defined actions.”
A “new frugality” has taken hold with baby boomers that is leading to a stronger sense of financial preparedness and confidence than seen in previous Allianz Life studies. Sixty four percent of boomers now say they are “savers” rather than “spenders.” And 61 percent say they always know exactly how much money is in their accounts.
This new frugal mindset has contributed positively to their bottom line. Boomers have the highest median amount in retirement savings among all three generations at $175,000. A full third of boomers say they have $250,000 or more earmarked for life after work.
Allianz Life says this indicates the “formerly free-spending boomers of the ‘Me’ generation" have gravitated toward the financial habits of their Depression-era parents. A quarter describe themselves as “penny pinchers.”
Allianz Life surveyed 3,000 Americans, including 1,000 aged 52-70, 1,000 Gen Xers (ages 37-51) and 1,000 millennials (ages 20-36).
Another conclusion: half the boomers think it “impossible” to determine retirement expenses, down from 60 percent in 2014. Only 36 percent believe they lack the tools to figure out retirement finances compared to 46 percent in 2014.