Retirement Planning: Boomers Navigate Impact of Financial Crisis

According to a new study, only two percent of middle-income Baby Boomers feel the economy has fully recovered from the financial crisis that began in 2007.

The survey, “10 Years After the Crisis: Middle-Income Boomers Rebounding But Not Recovered,” by Bankers Life Center for a Secure Retirement, finds that Boomers' lack of trust in institutions has led to permanent financial impairment.

“[Before the Great Recession] Boomers had a clear vision of what a personally satisfying retirement looked like,” said Scott Goldberg, president of Bankers Life. “But today, many are realizing they will not be as financially independent in retirement as they once expected.”

Goldberg discussed with Fox Business how Boomers have struggled during the slow recovery to rebound financially, and how most have readjusted their retirement expectations to meet their new reality.

Boomer: In what ways are Boomers today adjusting their retirement expectations?

Goldberg: While nearly all the middle-income Boomers we surveyed said they still plan to retire, the financial crisis certainly has forced them to adjust their expectations for what their “new retirement” will look like.

Increasingly, Boomers are either delaying their retirement or working through their retirement. Our research shows that working retirees do not just earn additional income. They enjoy social and emotional benefits by remaining connected to the workplace.

Boomer: What steps have Boomers taken to manage their spending, savings and investments since the start of the financial crisis?

Goldberg: According to the latest report from Bankers Life Center for a Secure Retirement, 84 percent of middle-income Boomers took at least one-step to adjust their spending behavior. About half of those surveyed either reduced their discretionary expenses (54 percent) or cut their monthly recurring expenses (47 percent).

Middle-income Boomers also adjusted their savings behavior, but what’s interesting is that those adjustments weren’t always to save more. While 28 percent built up an emergency fund and 17 percent now save a larger percentage of their paycheck, 21 percent are saving a smaller percentage of their paycheck and 24 percent say they no longer save.

The crisis also created a more defensive investing posture among middle-income Boomers, with more than one-quarter (28 percent) making more conservative investment decisions, and another quarter (26 percent) reporting that they no longer invest as a result of the crisis.

Boomer: What advice would you give to Boomers hoping to soon retire?

Goldberg: Maintain a household budget that minimizes monthly bills and limits discretionary spending. And importantly, plan for unexpected costs such as long-term care or a critical illness. Medicare does not cover all of the costs that might arise from an adverse health event, but, if you qualify, you can purchase supplemental health insurance plans that can provide important protection.

Boomer: How has retirement changed for Boomers, since the crisis?

Goldberg: Many middle-income Boomers now expect to maintain some sort of employment throughout a portion of their retirement. Among those in our Center for a Secure Retirement report, today, 48 percent expect to work full- or part-time in retirement, compared to just 35 percent before the crisis. Working in retirement, even part-time, will help relieve pressure on other sources of income. Plus, many jobs may provide access to valuable employee benefits.