Transition boomers rank health care costs as their biggest retirement concern (32%); 28% said their biggest retirement concern is not being able to cover basic living expenses, according to the report. Of those respondents, 64% were between 55 and 60, and 36% were between 61 and 65.
"It's alarming that so many boomers on the cusp of retirement are still unclear about the basic factors which determine their ability to fund their lifestyle once they stop working," said Walter White, Allianz Life president and CEO. "When you consider rising health care costs and the devastating effects of inflation on purchasing power, the fact that so many Transition Boomers are still confused about retirement income planning is a significant issue which urgently demands more education. Allianz Life developed a new planning framework , specifically to help boomers tackle these challenges."
Transition boomers also are starting too late with their retirement income planning. The survey found that 43 percent will not focus on retirement income strategies until they are less than five years from retirement; 16 percent will not begin until six months to a year prior to retirement.
The vast majority (94 percent) said Social Security will play a role in their retirement income, followed by pension plans (46 percent), defined contribution plans (43%) and "other investments" (30%). However, 30% indicated they expect some retirement income from part-time work and 20% anticipate income from either an inheritance (9%) or "other sources" (11%), the report said.
"Although many boomers say they'll work in retirement, studies show that many may have difficulty doing so due to layoffs, health issues, or the need to care for other family members," said Katie Libbe, Allianz Life VP of Consumer Insights. "When only 14% say they can count on guaranteed income from an annuity, and 20% expect an inheritance or income from 'other sources,' it's crucial for transition boomers to start thinking and talking about retirement income issues as soon as possible."
Transition boomers also underestimate the effects of inflation and taxes on their retirement, the report said, adding that 10% ranked inflation, and 6% said taxes, were a top concern. Asked to predict the cost of a loaf of bread in 2022, based on an average price of $2.50 today, 75% predicted the cost would double; 25% "showed unfamiliarity with inflation and the effect it can have on purchasing power in retirement," the report said.
Not all transition boomers are failing to plan for retirement; of the 43% who indicated they will use income from a defined contribution plan, the majority (57%) have spoken with someone about how to manage that money when they retire, and 71% said they had spoken with a financial professional.
The survey was conducted by Ipsos U.S. eNation online from June 6-8, 2012, with 1,095 respondents age 55-65, and has a +/- 3 percent margin of error.
Chris McMahon writes for Insurance Networking News.