Q&A: Helping Baby Boomers Meet Retirement Challenges

Many Boomers can't afford to retire, as their life expectancy continues to climb

By Stephen Miller, CEBS Dec 30, 2016
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As members of America's Baby Boom generation prepare to retire—or perceive that they can't afford to retire—benefit managers face a challenge in helping them to navigate their way forward.

As HR Magazine previously reported, employees who feel they are financially unprepared to retire can prevent the advancement of younger workers. That, in turn, can demotivate junior workers and hasten their exit from companies where they believe that their advancement opportunities are blocked. Providing tools, resources and programs to help senior workers save during their remaining working years, and to understand their financial options when they retire, can benefit both older and younger employees.

Advice on guiding Baby Boomers to plan ahead was recently shared with SHRM Online by generational sociologist Kim Lear, founder of Minneapolis-based Inlay Insights, which provides businesses with research and advice on cultural trends, and Seth Ravine, consumerism expert for Acclaris, a health benefits technology firm based in Minneapolis.

What generalizations associated with Baby Boomers do benefit advisors and employers need to reconsider?

Kim Lear: A major false generalization about the Baby Boomers is that they are technologically challenged. On the contrary, many have integrated technology into multiple facets of their lives—from posting on social media or banking online to researching virtual medical information.

AARP found that Boomers are 98 percent more likely to visit health websites than the average, younger Internet user. They're also open to exploring new technologies such as telemedicine and remote diagnostics. Employers should take Boomers' tech appetite and savvy into account when developing their organizations' retirement plan programs and offer intuitive tools that are easy to use and that provide highly engaging experiences.

Why are Baby Boomers the wealthiest generation yet the least prepared for retirement?

Seth Ravine: Industry experts predict that Baby Boomers will remain the wealthiest generation until 2030, accumulating nearly $26 trillion in financial assets. This unprecedented wealth can be largely attributed to three key factors:

  • The sheer size of this generation of more than 80 million individuals.

  • More income earners due to social shifts, such as women marrying later in life (if at all) and surging divorce rates.

  • Higher education levels, which enabled many Boomers to secure top-paying jobs.

Yet all of this wealth was not accumulated with retirement in mind. The expectation that retirement savings will not be a major source of retirement income is reflected in a 2015 Government Accountability Office study, which found that Americans ages 55 to 64 with retirement savings have saved an average of $104,000. If that amount were used to purchase an annuity, it would typically yield income of less than $600 per  month.

Of greater concern, only 55 percent of Baby Boomers have any money saved and set aside for retirement, a recent study found, and their Social Security benefits may be largely consumed by expenses for health care.

And though most are underprepared for retirement, life expectancy rates continue to climb. Baby Boomers now face an average retirement of 20 to 30 years. During this period, at least 60 percent of Boomers will experience more than one chronic health condition. That's why it's so critical for them to be proactive in planning for their post-career lives.

One way to do this is by using health savings accounts (HSAs), which are paired with high-deductible health plans, to save and invest tax-free for medical expenses in the future. As part of a long-term strategy, HSAs can help ease the rising financial burden of health care in retirement.

[SHRM members-only toolkit: Designing and Administering Defined Contribution Retirement Plans]

How are Baby Boomers redefining planning strategies?

Lear: Their collective willingness to try new things, adapt and improve extends to the way Boomers approach their health. Though many have or face chronic conditions, they recognize the need to change, have committed to live healthier lifestyles and have taken a more active role in their health and wellness options.

Boomers are drawn to technology that can help navigate the all-to-often convoluted health insurance and benefits selection and enrollment experience. Similarly, they seek digital health care tools that can help simplify transactions and insurance claims processes, keep them informed and up-to-date, and provide assurance that they're supported and in good hands for the long run.

Ravine: Despite the doom and gloom around the Baby Boomer retirement crisis, this generation has demonstrated a willingness to change, adapt and improve. That's why, as mentioned, many Boomers are turning to HSAs to help get their retirement planning back on track.

It's our job to ensure Boomers are fully prepared for the next chapter of their lives as they enter their retirement years. This means developing retirement plan programs with their needs and attitudes in mind, ensuring a continued two-way dialogue, leveraging tools that offer a fully integrated experience and finding new ways to automate and simplify processes. By doing so, we can help make their retirement the "golden years" that they are meant to be.

Related SHRM Articles:

Retirement Plan Education—Take It to the Next Level, SHRM Online Benefits, May 2014

Helping Employees Plan for Retirement, HR Magazine, March 2014

Related News Article:

How 401(k) advisers can make financial wellness programs more effective, Investment News, December 2016


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