Despite Recovery, Boomers See Delayed Retirement

Many plan to work at least four extra years

By SHRM Online staff Feb 23, 2011

Half of U.S. Baby Boomers who have postponed retirement because of the economic downturn expect to work at least four years longer than they originally planned, according to CPA financial planners surveyed by the American Institute of Certified Public Accountants (AICPA).

That's despite growing confidence in the stock market, which after hitting its financial crisis low point in March 2009 (when the S&P 500 index was down 50 percent from its October 2007 high) surged back in 2010, helping to replenish retirement accounts.

In the survey, conducted Jan. 12-Feb. 1, 2011, 52 percent of CPA financial planners said their clients—who typically have between $500,000 and $5 million in assets—were at least "somewhat confident" in the stock market. That’s a turnaround from a year earlier when 54 percent said their clients were "not very confident."

“Boomers have been scarred by the economic turmoil of the past few years and face complex challenges going forward,” said Clark M. Blackman II, chair of the AICPA’s personal financial planning executive committee. “While more optimistic about the markets, many Boomers remain uncertain about the U.S. economy and their own situations as they contend with job loss—their own and their children’s—lower home values and rising education costs.”

The year 2011 will be a significant milestone for the Baby Boomer generation, the time when the first of them turn 65. Boomers, born between 1946 and 1964, number 77 million and represent about 37 percent of the nation’s total population age 16 and older, according to government statistics.

Lingering Concerns

When financial planners were asked how many extra years their Boomer clients who had delayed retirement because of the economy expected to work, they replied as follows:

1 to 3 years (32.3 percent).

4 to 6 years (39.3 percent).

7 to 10 years (9.8 percent).

More than 10 years (3.7 percent).

In addition, financial concerns are prompting changes in education decisions. Half of the surveyed financial planners said that compared with five years earlier, more of their clients’ children are opting for state universities or community colleges over private schools because of cost.

Among other survey findings:

48 percent of financial planners said their typical client is somewhat or very pessimistic about the U.S. economy amid gaping budget deficits and high unemployment.

51 percent said at least one client was turned down for a mortgage or refinance in the past year. The most common reasons: lower home values and higher underwriting standards.

44 percent of their clients emerged from the recession with increased net worth; 39 percent had decreased net worth; 17 percent stayed the same.

“These survey results show optimism tinged with some caution,” said Lyle K. Benson, president of L.K. Benson & Co. in Baltimore, Md., and member of the AICPA’s personal financial planning executive committee. “Having weathered the economic storm," he noted, those using the services of financial planners are trying to "make sense of the new reality and get back on track toward their financial and personal goals.”​

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