Belying the worries of many analysts that Great Recession would hamper the retirement plans of the baby boomers’, it is clear that the generation is not only enjoying its retirement, but also doing it with much less amounts of money than expected.
The T. Rowe Price (NASDAQ: TROW) survey included approximately 2,500 respondents, where about 40 percent have attained the minimum age of 50 years, and are continuing to work. The group voiced its worries about exhausting its savings or dropping their existing living standards.
Most of the baby boomers are clearly prepared for their retirement. The average household asset is a strong $465,000 and about 61 percent feel that they can push the number higher up to $693,000. Not only that, but about 60 percent felt that there will be no need for them to utilize their home equity if they want to survive post retirement.
In case of people already into retirement phrase, the outlook appears even rosier. For individuals retired for approximately three years, about 89 percent reported being mildly satisfied in their present situation. About 50 percent have reported to be continuing their lifestyle they had after retirement – even when they have only about 65 percent of their previous income.
Analysis and reason for success
This has confounded even seasoned financial analysts – including the author of the original study – T. Rowe Price. All of them have recommended saving enough to guarantee a minimum of 75 percent of working income after retirement. The cream on the cake is that the retirees are now enjoying their lives on the average household asset level amounting to $473,000. It is a little less than what the still employed baby boomers have saved in their retirement years.
The big reason for such a success is flexibility, where retirees can adjust their spending patterns according to the conditions prevailing in the market. Even as almost half have plans for withdrawal and have not withdrawn an excess of four percent per year from retirement portfolios since they have retired, preference is clearly towards spending less than reducing the portfolio value.
Another reason for living well is great planning. The respondents had an excellent retirement plan, and they started saving early in their lives. This guaranteed them a satisfying and comfortable retirement. Research by Boston College has revealed an elegant retirement savings solution: saving about 15 percent every year for approximately 30 years.