NORTHBROOK, Ill., Nov. 27 /PRNewswire/ -- America's largest generation
ever may be headed for a financial crisis, as Baby Boomers have saved, on
average, only 12 percent of what they believe they will need to meet basic
living expenses during retirement. In addition, unless Baby Boomers address
this challenge, they will be burdened with significant debt and financial
obligations in retirement, and are relying far too heavily on Social Security.
These were among the sobering conclusions in the Allstate Financial
"Retirement Reality Check" survey, released today.
"This is a call to action for a generation that is in a critical financial
situation," said Tom Wilson, president of Allstate Financial, a business unit
of The Allstate Corporation. "While this is certainly unsettling news, the
message we want to tell people is that it's never too late to start planning
and saving."
Seventy-six million strong, Baby Boomers (ages 37-55) make up 29 percent
of the U.S. population. By the year 2030, there will be 70 million people
aged 65 and older -- more than twice the population for that age group in
1999, according to the U.S. Bureau of Labor Statistics.
Baby boomers under false impression that they are prepared
Fully 78 percent of the Baby Boomers surveyed believe they are prepared to
meet the financial aspects of retirement, and 69 percent say they are
confident that they know how much money they need to save in order to maintain
the retirement lifestyle they want. However, the survey data indicates they
are severely unprepared:
-- Reality check: On average, those surveyed said they would need $30,000
per year for basic living expenses during retirement. To have $30,000
per year, Baby Boomers will need approximately $1 million upon
retirement, factoring in an 8 percent return on savings and an average
4 percent rate of inflation.
But surveyed Baby Boomers have saved an average of approximately $120,000
-- a mere 12 percent of what they'd need for a 20-year retirement, spending
$30,000 a year (adjusted for inflation).
-- Even the $30,000 that Baby Boomers think they'll need per year may be
too low, as predictions suggest that the cost of living will double
over the next 20 years. Of survey respondents, 46 percent thought that
living expenses would increase less than 20 percent over the next 20
years, and only 6 percent agreed that the cost of living expenses would
double.
September 11 events have not changed saving or investing habits
The survey found that despite market volatility, a possible recession, and
the likelihood of a long-term war, the majority of Baby Boomers (81 percent)
do not plan to significantly increase the amount of money they are saving for
retirement. In fact, 66 percent of those surveyed plan to make no change
whatsoever to the amount they are currently saving.
Likewise, the majority of Baby Boomers surveyed (74 percent) have not made
significant changes to their investment style after September 11, as only 10
percent said they would invest much more conservatively and 3 percent much
more aggressively. The balance of respondents said they were not sure how
September 11 events would impact their savings or investing habits.
Looking forward to golden years - but will they be free and clear?
The majority of those surveyed say they look forward to retirement, with
63 percent believing that retirement will be the best years of their lives.
-- Reality check: Retirement may be the best years, but they may not be
free and clear. Sixty-eight percent of the survey respondents say that
saving for their future will continue to be an obligation, even while
they're retired.
-- According to the survey, sixty percent of Baby Boomers anticipate that,
in their retirement, they will have more financial obligations than
their parents' retirement, and nearly three out of five Baby Boomers
(58 percent) surveyed will be in debt during retirement.
-- Twenty-seven percent expect to pay on a mortgage, 37 percent on car
payments, and 25 percent on credit card debt during retirement.
-- Many Americans expect to be responsible for some kind of financial
support for family members during retirement. Fifteen percent of
those surveyed will provide for elderly parents and/or in-laws, and
29 percent will be financially responsible for children or
grandchildren over 18 years old.
-- One in five Baby Boomers surveyed expects to pay tuition for one or
more of their children during retirement.
Social inSecurity
Despite prevalent questions concerning the future of Social Security, one
in three (32 percent) Baby Boomers surveyed plans to use Social Security as
the bulk of their retirement income.
-- Reality check: According to the Federal Consumer Information Center,
Social Security only replaces approximately 40 percent of the average
person's salary.
-- The public trustees of the Medicare and Social Security Trust Funds
have warned that Social Security Trust Funds will be depleted by 2037
if no changes are made.(1)
"The magnitude of the savings gap is stunning. These findings should be a
wake-up call," said Wilson. "At Allstate Financial, we will use this
information to help and encourage our customers and all Americans to educate
themselves and their families about the need to save and plan realistically,
so they can enjoy a long and fulfilling retirement."
The Allstate Financial "Retirement Reality Check" was conducted in an
effort to learn how Americans are planning for, and what types of financial
challenges they anticipate during their retirement.
The Allstate Financial "Retirement Reality Check" survey was created by
Allstate Financial in conjunction with Harris Interactive. Using a random
digit dialing methodology, Harris polled 1,004 people born between 1946 and
1961, with household incomes ranging from $35,000 to $100,000. The margin of
error is plus or minus 3.1 percent. For the data related to September 11,
Harris surveyed 294 respondents who met the same criteria. The margin of
error for the second sample is plus or minus 5.7%.
Allstate Financial Group is a business unit of The Allstate Corporation
(NYSE: ALL), representing the affiliates that provide life insurance,
retirement, investment and health and disability insurance products. Allstate
Financial is the marketing name for Allstate Life Insurance Company, its
subsidiaries and certain affiliates. Widely known through the "You're In Good
Hands With Allstate(R)" slogan, Allstate Financial can help its customers
achieve a secure financial future with a broad array of retirement solutions.
Allstate Financial is also a premier provider of variable annuities and long-
term care insurance. In addition, through workplace marketing, Allstate
Financial offers life, health and disability insurance through employee
payroll deductions.
Customers can access Allstate Financial products and services through
approximately 60,000 financial professionals, including Allstate agents,
independent agents, and banks and securities firms.
(1) Source: Social Security Administration. http://www.ssa.gov (March 31,
2000).
SOURCE Allstate Financial Group
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http://www.allstate.com
Company News On-Call:
http://www.prnewswire.com/comp/109395.html
CONTACT:
Laura Margolis of Allstate Media Relations,
+1-847-402-5600
EDITORS' Note: For interviews with Allstate Financial, copies of
the survey executive summary or third-party resources who can
address information revealed in the study, please contact Laura
Margolis, at Allstate Financial, 847-462-5600.
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