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Mission: Educate the Boomers

Carrie Burns October 2006

The stats have arrived- survey results from insurers and researchers have one thing in common: Baby boomers are not prepared for retirement, and therefore insurers could be missing out on business. Some companies are stepping up, using technology to capture this pending market.

Allstate's 2006 Retirement Reality Check survey reveals that 40% of Americans admit they are not saving seriously for retirement. One unexpected finding, according to the survey, is that Generation X respondents (those born from 1965 to 1978) are more likely than their elders to describe themselves as financially independent-73% of gen-Xers compared with 67% of baby boomers.

Even affluent baby boomers need help. Almost half of affluent (minimum of $250,000 in investable assets and/or $150,000 household income) baby boomers have never discussed their needs for retirement with a financial adviser, according to results from a survey conducted by the Phoenix Affluent Marketing Service (AMS). Thirty-six percent of older baby boomers, age 50-59, with an average net worth (not including primary residence) of $1.7 million, plan to retire in the next 6-10 years and 28% plan to retire in less than five years. Of those planning to retire, 62% do not have a written financial plan for retirement, and 27% have never met with a financial adviser to discuss their needs for retirement.

So, what does this future group of retirees need to prepare? According to industry experts and those with a vested interest in this growing market, education is key to preparation. A New York Life Insurance Co. survey reveals that 10% of Americans understand how much of their retirement savings they can spend each year without running the risk of outliving their assets.

Nearly half of the Americans surveyed between the ages of 41 and 92 overestimated this safe withdrawal rate, which experts benchmark at 4% annually for the typical retiree, according to the survey. Forty percent of respondents admit they do not know how much to withdraw without spending down their savings.

ONLINE EDUCATION

New York Life takes on the task of educating consumers with a Web site, www.guaranteesmatter.com, directed at retirees.

"The underlying logic and motivation behind the site was to make it educational," explains Kevin O'Fee, managing director of New York Life Investment Management. "It's about the process and identifying the issues people need to understand to create a retirement income strategy based on their needs."

The site, which went live in April, is broken down into three sections. One section, Retirement Challenges, provides results from its survey and other articles pertaining to problems consumers may face when planning for retirement. A second section, Guaranteed Lifetime Income, contains an interactive quiz, which tests user knowledge on retirement income. And the third section provides related articles and online calculators.

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