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Boomer Insecurity in the Land of Plenty

The broad U.S. market has performed extremely well in recent years. Since the end of 2010, the S&P 500 has been rising steadily gaining almost 60% before hitting record highs this month. And, most economic indicators remain positive with an outlook for growth rosy enough for the Fed to signal shutting off the cheap money spigot.

This backdrop makes the findings of the Boomer Expectations for Retirement 2014 study by the Insured Investment Institute (ICI) all the more disturbing. The study surveyed 800 boomers aged 51-67 in January of this year. The study is longitudinal and has been conducted annually since 2011.

Consider the following highlights:

• The number of boomers confident in their efforts to prepare financially for retirement dropped 9 points from 44% in 2011 to 35% in 2014.
• The percentage of boomers confident that they will have enough money to live comfortably throughout their retirement years dropped from 37% in 2011 to 33% in 2014.
• From an economic standpoint, last year 77% of boomers reported being satisfied with the way things were going, while 19% were dissatisfied. This year only 65% were satisfied with 32% dissatisfied.
• During the past year, 25% of not-yet-retired boomers postponed their plans to retire – the highest percentage since 2011, the first year of the study.
• The percentage of not-yet-retired boomers who are planning to retire at age 70 or later has increased each year, rising from 17% in 2011 to 28% in 2014.

We don’t want to speculate here about the reasons behind the stark disconnect between the financial markets/economy and the perceptions of those near retirement. But we think it’s important for wealth managers, particularly those that serve the mass affluent segment, to recognize that market conditions may not be the best indicator of boomer concerns when it comes to retirement.