Boomers Face Difficult Times In Retirement

Tens of millions of American Baby Boomers have unrealistically high expectations of how well they are going to live in retirement.

They see themselves indulging in an endless round of leisure activities - cruises, culture, creativity, golf, skiing and romps in the sun. All without a care for the cost.

But it’s not going to happen, because they haven’t saved and invested to pay for it.

They haven’t saved and invested, despite the fact that they have the income to afford it.

They haven’t saved and invested for their later years because they are confused.

These conclusions come from a new national poll of Baby Boomer attitudes and preparations for retirement. The survey was conducted by the National Center for Women and Retirement Research at Southampton College of Long Island University for the investment firm of Scudder, Stevens & Clark Inc.

Dr. Christopher L. Hayes, a psychologist who is director of the center and who headed the research, says the study yields groundbreaking insight into the “money psychology” of the Boomer generation.

“Above all else,” he told me in a telephone interview, “what came through is confusion. Mass confusion.”

Baby Boomers are confused about what it takes to save, he said, and they are confused about how to invest.

They expect these things to be easier. They expect someone to produce a simple formula for saving and investing - just do these steps, one through 10, and everything will turn out all right.

The Hayes group polled 1,140 Boomers with household incomes of at least $30,000.

Half (48 percent) said they expect to retire early. And half “anticipate some type of paid employment in retirement.” In effect, they aren’t really retired.

Are a great many deluding themselves?

“Yes,” says the research director. “There’s a lot of that - smoke and mirrors.”

Of those polled, 13 percent plan to stay with their current careers past age 65. Another 20 percent aren’t planning to retire at all. Only 18 percent said they’d retire at the traditional age of 65.

“This whole generation,” says Hayes, himself a Boomer, “is in a state of flux - as shown by the percentages of those who want to retire before 65, and those who want to work until their boots drop.

“In the survey results, we see their desire to retire before 65, which in reality they probably won’t be able to do. They desire this glorious retirement lifestyle. But they know deep in their hearts that with less than $50,000 in their 401(k), it’s not going to work the way they keep telling themselves it will.

“So there is a lot of delusion going on. That is exactly what you see in the data - a dichotomy between the expectations and the reality.”

And it doesn’t have to be, he said.

Despite the fact that the Boomers surveyed had average annual income of $56,000 - three fourths (73 percent) said lack of money was the main obstacle to their planning for retirement.

In other words, they have the money. They lack the will.

Why?

“They suffer from learned financial helplessness,” says Hayes. Told by the media and financial providers that they will need a million dollars and more to retire, many Boomers are overwhelmed. Defeated. The numbers are too daunting.

“What I see in the research,” he told me, “is what I see in society: The Boomer generation wants the fashion-magazine guide, the big Atlas road map, the gourmet recipe for a wonderful retirement lifestyle. But it’s not that easy.

“The Boomers were brought up with a USA Today and TV-soundbite mentality that conditions them to expect someone else to tell them in 10 easy steps exactly how to retire comfortably. That, in a nutshell, is what comes through in the research.”

“But planning for the future and managing money and living and investing for retirement take a lot of doing. There are no sure-fire formulas.”

Life is messy. Life is hard. You do the best you can. But you do it. Don’t, and the alternatives are even less attractive.

, DataTimes MEMO: Associate Editor Frank Bartel writes on retirement issues each Sunday. He can be reached with ideas for future columns at 459-5467 or fax 459-5482.

The following fields overflowed: CREDIT = Frank Bartel The Spokesman-Review