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The quest for "the good life" continues to drive Baby Boomers to sacrifice
today, so that they can enjoy the finer things tomorrow. According to MainStay
Investments' Boomer Retirement Lifestyle Study, 76 percent of the Baby Boomers
surveyed (age 45-65 that are not yet retired) say they are willing to spend less
now to invest for a more comfortable lifestyle in the future.
"When it
comes to lifestyle, Baby Boomers are redefining what constitutes a basic need
and what they consider a luxury. We have clearly expanded beyond the three
traditionally thought-of necessities - clothes, food and shelter. Our study aims
to explore the things in life that are most valued, and to analyze what Boomers
say they will do to continue to enjoy a more robust life in retirement," said
Matthew Leung, director and head of practice management programs at MainStay
Investments.
Forty (40) percent of the Boomers surveyed said they will
have to delay retirement in order to afford the lifestyle they want to live.
Besides working longer, Boomers are saving more, adjusting their portfolio
allocations, and seeking help from financial advisors--in that
order.
What Do Baby Boomers Consider a
Luxury?
According to the survey, the majority of Baby Boomers
believe that healthcare coverage, internet connection, shopping for birthdays
and special occasions, and pet care are basic needs. And about half of those
surveyed consider annual family vacation or weekend getaways, having
eldercare/home aid, professional hair cut/color and funding
children/grandchildren's education to be basic needs as well.
"An
interesting pattern that we noticed throughout the research was that as
consumers age, things that were once considered luxuries are more likely to be
considered basic needs--thereby reaffirming that Boomers essentially want it
all," said Leung. "In fact, almost half of consumers (47 percent) say they would
downsize their home in retirement in order to afford these
luxuries."
Outside of a select few traditionally "gender-specific"
luxuries, males and females held similar attitudes towards needs and luxuries.
When asked which luxuries would be the most difficult to give up, traveling and
dining-out topped the list for both men and women.
"It was interesting
that a Mars vs. Venus dynamic was not evident in the results as men and women
generally applied similar relative values on the luxuries without material
difference of opinion," said Leung.
Healthcare Costs are Biggest
Threat to a Comfortable Retirement
Virtually all Baby Boomers (98
percent) said healthcare coverage is not a luxury, but a very basic need--and a
need that they are extremely concerned about being able to afford. Almost three-
quarters of respondents (74 percent) rated healthcare costs as either their
greatest concern or their second greatest concern.
"While a majority of
consumers are setting aside funds specifically for future healthcare costs, a
whopping 41 percent are not doing anything specific to save for healthcare, and
will be relying on their retirement assets to cover healthcare and everything
else," said Leung. "Given their lack of allocating pre-retirement income toward
these looming costs, we find Boomers' actions do not always reflect their
greatest concerns."
More than half (55 percent) of the consumers
indicated they would rather work longer to pay for healthcare expenses, rather
than give up luxuries in retirement.
Boomers' Attitudes Towards
Retirement Strategies and Products
When it comes to asset
allocation, Baby Boomers say they are willing to sacrifice a portion of their
assets if it will help them achieve their retirement goals. Eighty-four percent
of consumers said that they would be willing to allocate a portion of their
total assets in order to guarantee income for life. However, around half of the
84 percent said that they would only be willing to allocate a portion of their
assets if the income was enough to cover both basic and discretionary
expenses.
"The research indicates that an appetite for guaranteed income
products clearly exists among this demographic," said Leung.
While
consumers are making progress with regard to being open to products and
strategies to help them achieve their retirement goals, more than half (52
percent) said they do not plan to consolidate their retirement assets and almost
half (48 percent) are not even using a financial advisor-- suggesting that
Boomers may still have some work to do in terms of developing a solid retirement
strategy.
"Given the longevity risk boomers face, our survey indicates
that boomers could use some help in creating a successful retirement plan. By
working together with a financial advisor(s) to educate themselves on retirement
income issues, and by planning and developing a consolidated retirement
strategy, boomers can achieve the life they desire in retirement," concluded
Leung. |
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