They used to “hope they’d die before they get old” and many didn’t trust anyone over 30, but shuffleboard and chardonnay suddenly don’t sound so bad.
Six out of 10 retired Boomers feel better than expected about their retirement, according to a new survey from American Funds.
Not that it’s completely without worry, and through years of investing and saving for retirement, Boomers have learned a few lessons.
The survey highlights five rules that Boomer investors believe to be essential to saving for a secure retirement.
- Stay invested for the long term—Nine in 10 retired Boomer investors stress the importance of getting and staying invested in the market. When asked about what they would do in fluctuating markets, only three in 10 would adapt their strategies based on market conditions.
- Keep an eye on fees—Ninety-four percent of retired Boomers want to be able to easily understand the fees they pay, and 78 percent stressed low-cost simple investments to buy and hold for the long term.
- Diversify your portfolio—Eighty-five percent of retired Boomers believe that building a diversified portfolio is one of the most important elements for a safe path to a better retirement.
- Protect yourself against market downturns—Eight in 10 retired Boomers stress the importance of protecting their nest egg and lowering the risk of losses during market downturns.
- Start saving early and often—Eight in 10 retired Boomers believe saving a portion of monthly income toward retirement is one of the best things you can do, and 60 percent said they wished they had started investing as young as possible.
Health care tops the list of surprise costs. Forty-three percent of retired Boomers report spending more on health care than they had planned. Retired Boomers want to travel, but 40 percent are spending more on this activity than they anticipated. Thirty-four percent say they are paying more than expected in taxes as retirees.
By contrast, Boomers seem to be budgeting well for other costs: Only around one in 10 retired Boomers say they face higher than expected housing costs or believe they carry too much on their credit cards.
Eleven percent are paying more than they expected to support dependent family members, which could include adult children living at home or in need of financial support.
Retired Boomers Are the Least Worried
When asked, “How does your life in retirement compare to the expectations you had before you retired?” six out of 10 Boomers said they feel positive about their retirement, and 30 percent said it’s about what they expected. Only 10 percent feel disappointed or negative about their retirement, mainly citing financial stress.
Financial worries differ less between generations than between retired and non-retired Boomer investors. Six out of 10 working American adults and 65 percent of non-retired Boomers are worried about not having enough money for retirement, compared to only 27 percent of retired Boomers.
Importantly, this difference in worry levels holds up even when comparing retired and working Boomers with similar-sized nest eggs. But more than a third of Boomers are concerned about how ensuring long-term care for themselves or a family member could impact their retirement.
Almost a third of Boomer investors indicate no financial concerns, compared to only 16 percent of Generation Xers and 11% of Millennials. The number of Gen Xers and Millennials who are worried about how household income, debt, education costs or caregiving for an aging parent could hold them back financially is two to three times higher than for Baby Boomers.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
