Boomer Retirement

If you don’t have anywhere near a million dollars stashed away for retirement, you might be interested to read this view of how inadequate a million might be. And if you do have a milliion or more, it may be that you have to read this advice from investment advisor Jim Bell. He says that while Boomers are redefining retirement, they might be wearing rose-colored glasses because they are not necessarily Redefining Investment Strategies.

Every day in 2006 another 8,000 Baby Boomers turn 60, and the affluent among us are optimistic about themselves and their futures. Yet, the aging “me-generation” may not be matching our financial plans to our vision of an active, generous retirement, according to a nationwide survey commissioned by Bell Investment Advisors, a wealth management firm in California.

The survey, conducted among five hundred 60-year-old high-net-worth investors across the U.S. by Opinion Research Corporation, found that these Boomers feel “great about their lives overall.” Four in ten believe that age 60 today is more like being 50 a generation ago. Perhaps, as a result of this sense of well-being, almost half of those surveyed say they plan to work as long as they are able, either in a full-time or part-time capacity, and 94 percent plan to help their children financially.

However, the survey reveals a dichotomy: While Boomers are redefining retirement, they are not redefining their investment strategies.

“We found that affluent Boomers have a false sense of complacency once they hit the million-dollar mark in retirement savings,” says Jim Bell, president and founder of Bell Investment Advisors. “With so many people living well past 80 or 90 years of age, $1 million is just not enough to take them comfortably through their golden years.” While a majority of the respondents believe they have enough to retire on comfortably, 39 percent of respondents have less than $1 million saved for retirement. Only one in five believes they need to increase their retirement savings.

The survey also found that many Baby Boomers are planning to work as long as possible in their current careers to add to their retirement savings. “The problem with this strategy is that although they may live longer, they may not be able to work as long as they hope, if health issues arise,” says Bell. “Boomers need to acknowledge that health care will likely cost more than they currently think.”

Two other findings highlight how affluent Boomers at 60 have built their net worth and how they plan to invest for the future.

Of those surveyed, 37 percent claim to have financial security that derives from equity in their home or other real estate investments. Only 29 percent report investing in the stock market. Bell says, “While real estate has recently produced outsized returns, boomers should not be deluded into thinking that this trend will continue. Over time, the stock market has been the best asset class to consistently outperform inflation.”

When it comes to investing, 38 percent of the affluent Boomers plan to invest more conservatively in the future to preserve what they have; 24 percent hope to accumulate more wealth to fund a better retirement. “Boomers should not be investing more conservatively as they approach retirement,” Bell says. “With longer life expectancies and more active lifestyles, they need investments that will overcome inflation and build purchasing power. What may have worked for the Boomers’ parents is no longer valid today.”

Boomers also show up in the survey as generous. 19 out of 20 said they would help their children financially: three out of five plan to pay for all or part of their children’s education; 43 percent plan to help children with down payments on homes, and 35 percent plan to help finance their grandchildren’s educations. But Bell warns again this. “Don’t give up your retirement savings to fund education for your children or grandchildren. With the low-interest rates of student loans, the financial situation can not only be manageable for students, it can also teach them sound money management habits for the future.”

Other Survey Findings:
- Men are more likely than women to define retirement as “gradually scaling back”
- One-third of the respondents plan on pursuing personal interests and passions without regard to making money, such as charitable work, and more women than men define retirement this way
- Real estate has been an extremely popular investment for those in the West (47%)
- Men are far more likely than women to feel they are at the “top of their game” professionally at age 60 (34% vs. 19%)
- Regionally, there are significant differences in Boomers’ retirement outlooks, with fewer than half of those in the Northeast feeling they have enough saved for retirement (46%), compared with 62% of those in the West who believe they have enough saved for retirement.

Bell Investment Advisors commissioned this survey of 500 individuals turning 60 this year who have at least $1 million in investible assets, excluding their primary residence.

To view a summary of the survey results, go to www.bellinvest.com.