Retirement Plans and Financial Expectations: A Survey of Leading-Edge 'Baby Boomers'

“Baby boomers” comprise a significant portion of the U.S. population, and the leading-edge of this group will begin retirement within a decade. These individuals, in the age range of 45 to 55 years, are currently at or near the peak of their income-earning ability and are in a stage of life where retirement planning to meet future income needs is essential. This report presents the results of a national-level survey of leading-edge baby boomers and how they plan to meet their financial needs in retirement. Using a list-sample technique, 396 individuals in the age range 45 to 55 years were interviewed by telephone about their plans for retirement, the sources of wealth they have accumulated, the sources of income that they expect in retirement, and their perceptions about the future of the economy and financial markets. Health care costs appear to dominate people’s concerns and are the most important use to which they plan to put their accumulated wealth. Most individuals in this group expect to receive retirement income from multiple sources, including Social Security, employer pensions, work in retirement, and long-term investments in financial markets. The majority of individuals surveyed indicated that they have a personal portfolio of marketed securities. However, portfolio holders have much higher expectations of market performance and portfolio return than do professional financial advisors, in some cases twice as much on a ten-year average annualized basis. This optimism appears to be the result of several factors, including a buoyed sentiment about the long-term prospects for the domestic economy based on recent market performance, and a tendency toward establishing multiple income sources for retirement as a strategy for managing an uncertain future.