First Baby Boomers To Retire Are Doing Well
Kurt Brouwer January 11th, 2008
We have seen many stories about the dire straits baby boomers will enter when they retire, but all is not lost in my opinion. For example, this post demonstrates how much Americans have socked away for retirement, $16.4 Trillion in Retirement Accounts. Now, from Bankrate.com we have more indications that at least the first generation of boomers are in good shape for retirement [emphasis added]:
The Oldest Boomers Are More Set For Retirement Than Thought (Bankrate.com / Yahoo, January , 2008, Robert Powell)
‘ Breathe a sigh of relief. The nation’s leading-edge baby boomers — about 3 million strong — are turning 62 this year and, contrary to popular opinion, they are not in desperate straits.
In fact, Americans born in 1946 are in relatively good financial shape and seemingly entirely different from other boomers. Maybe that’s because only 2% of them report that they attended Woodstock.
Consider, for instance, some highlights from MetLife’s Mature Market Institute just-released study of boomers turning 62. The majority are in good health; 77% report being in good to excellent health. They have relatively good income, $71,400, which is a tad more than the average household income in America.
They have a decent net worth; $550,000 including the value of their homes. (The average retiree, by the way, has just about $254,000, excluding the net present value of Social Security, in net worth, according to a Boston College Center for Retirement Research study.)
Nearly half have a traditional pension plan, 50% have a 401(k) and 50% have an IRA. Nearly 70% have employee or retiree health insurance. And about a third have long-term-care insurance.
But what’s especially telling about this group’s financial health is this: While roughly 80% of Americans take Social Security at age 62, this group — which includes such well -known Americans as Jimmy Buffet, President George W. Bush, former President Clinton, Sally Field and Diane Keaton — will not. Just one-third said they plan to take Social Security when they turn 62; the rest plan to take Social Security at age 65 or later…
…In the past, those who took Social Security early did so for health reasons. (At least one study has established a correlation between a person having a high body mass index and taking Social Security early.) But the leading-edge of boomers will take Social Security early for different reasons.
“They feel they’re entitled and would rather have the money than let the government have it,” according to MetLife’s study. Those who will take the payouts now said they fear there will be nothing left in the Social Security system if they wait.
Lots of positives at 62
But even though the majority of leading-edge boomers don’t plan to take Social Security early, they do say the best things about being 62 are “retirement” and “not having to work.” When asked to use one word to explain the best aspect of being 62, those surveyed also answered: being alive, freedom, health, Social Security, wisdom and independence. “As one person put it, ‘I’m glad to be on the planet, rather than in it,’” the survey said…’
The findings of this study may have interesting implications for Social Security in that most boomers are delaying the receipt of Social Security payments because they have enough income for the early years of retirement. And, many of those who are taking Social Security early are doing so out of fears that the system will run out of money. If our political leaders could cobble together a reasonable plan for securing Social Security, that might influence more boomers to wait before taking Social Security income.
For an interesting take on why older boomers may be happier than younger boomers see Why Are Older People Happier Than Younger People?
This post also appeared on the Facing Up Blog
- Money , Personal Finance , Retirement
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One of the major reasons for not taking early Social Security is the gap between early retirement eligibility and Medicare. I had a former co-worker with a net worth multiples of what you cite as typical, he stayed on the job for the health coverage. Given his health history though he was currently strong and healthy he would never have been able to get private insurance at practically any cost. Open Medicare to early retirees and I suspect that 1/3rd figure (low in my immediate experience) will jump.