Boomer Saving Improves, But Retirement Uncertain

While baby boomers are saving more for the first time in five years, they have a long way to go for a secure retirement, Merrill Lynch & Co. said.

The 1997 Merrill Lynch Baby Boom Retirement Index shows that boomers are saving 38.5 percent of the money needed to maintain their living standard in retirement, up from 35.9 percent last year.

“That increase is at least a bit of good news,” for the 76 million Americans born between 1946 and 1964, said Merrill Lynch Vice Chairman John Steffens.

Money management companies are trying to scare the financial daylights out of baby boomers because the retirement savings of the largest generation in U.S. history represents a chance for unprecedented profit for these companies.

While the index serves to scare up business for Merrill Lynch, analysts agree with the findings that Americans simply aren’t saving enough for their old age.

“People are under saved,” said Ira Zuckerman, an analyst at Nutmeg Securities Ltd. who follows the insurance industry, which is also trying to attract boomer savings.

The rise in savings comes primarily from the oldest baby boomers, which means the increase may be short-lived.

Baby boomers aren’t even saving enough for emergencies before retirement, the index shows.

Many households are unprepared to weather setbacks such as a job loss or large unexpected expenses, according to Merrill’s “readiness” index, which is based on a survey of 2,000 households by Luntz Research Cos.

About half of baby boom households have more than three months of income readily available for a crisis. Financial experts recommend that households stash away an emergency fund worth three month’s to six month’s income.

Single women, African-Americans and those without a high school diploma were the least prepared, Merrill Lynch said.