Bay State boomers expect to retire later and face financial challenges
BOSTON — November 13, 2005 — Nearly half (49 percent) of Massachusetts baby boomers plan to work beyond the age of 65 and close to half (44 percent) expect to have only enough money for basic living expenses or not even that in their retirement years, according to a report released today by the Massachusetts Institute for a New Commonwealth (MassINC).
A Generation In Transition: A Survey of Bay State Baby Boomers finds that roughly two-thirds (65 percent) of boomers expect to continue working in some capacity even after retirement, including 11 percent who do not believe that they will ever retire. Of those who plan to continue working after they retire, 39 percent will do so because of financial necessity rather than choice.
The survey also foreshadows a new boomer exodus from Massachusetts – exacerbating the state’s population loss challenge. More than one-third (35 percent), roughly 650,000 people or 10 percent of the state’s population, want to retire outside of Massachusetts . Boomers who want to leave Massachusetts are: more likely to describe their finances as fair or poor; equally likely to have a college degree, but less likely to hold a graduate or professional degree; and, more likely to be a person of color.
“Boomers have always broken the mold – they promise to do so again as they redefine retirement,” said Ian Bowles, President & CEO of MassINC. “The first boomers turn 60 in January. Now is the time for the Commonwealth to prepare for change.”
A Generation in Transition is the first comprehensive survey of Bay State boomers, addressing financial, health, retirement, housing and civic concerns. The results are based on a telephone survey of 1,000 Massachusetts adults aged 40 to 58 conducted between June 23 and July 23, 2005 by Princeton Survey Research Associates International. The project was sponsored by Blue Cross Blue Shield of Massachusetts.
The study shows that many boomers are facing an uncertain financial future. Only 17 percent expect to live very comfortably in their retirement years. In addition, the survey finds that nearly one-third (30 percent) of the state’s boomers have less than $50,000 in retirement savings, including 13 percent who hold no retirement savings at all.
The study also reveals significant differences between younger and older boomers. About 57 percent of the youngest boomers (aged 40-44) say that they expect to retire later than age 65 or not at all, while only 39 percent of the oldest boomers (aged 55-58) are planning to do so. Similarly, 72 percent of the youngest boomers say that they are likely to continue working at least part time after retirement, in contrast with 54 percent of the oldest boomers. The youngest are also waving financial red flags in regard to credit. Boomers aged 40-44 are more than twice as likely to have “maxed out” their credit cards than those aged 55-58 (23 percent vs. 9 percent).
“By virtue of its sheer size, the boomer generation has always had a profound impact on the economic and civic life of the Commonwealth,” said Peter Meade, Executive Vice President of Blue Cross Blue Shield of Massachusetts. “Policymakers and the business community — especially the financial services industry and those of us in health care — should review this report for the opportunities to help the Baby Boomers meet their needs over the next 25 years.”
Other key findings in A Generation in Transition include:
- More than a third of respondents (36 percent) presently describe their personal finances as fair or poor. It takes an annual household income of at least $100,000 – nearly twice the state’s median income – to bring financial peace of mind to Massachusetts boomers.
- The top three cited priorities for deciding where to live during retirement are: to live somewhere with low taxes or that is affordable; to live close to family and close friends; and to live somewhere that is not too crowded or stressful.
- Of the boomers who are parents, 81 percent currently have dependent children, and of those with adult children nearly half (48 percent) are supporting them financially. More than half of all boomer parents in the state (52 percent) believe that they will still need to support their children over the coming 10 to 20 years.
- Of the boomers with a living parent, 32 percent have a parent who depends on them for financial assistance or personal care. More than half (59 percent) expect to help care for their parents in the future.
- Eleven percent of Bay State boomers currently support or care for both children and parents. Looking to the future, 17 percent expect to be caring for two generations at the same time.
- Although the majority of Massachusetts boomers describe their present health as good or excellent, 69 percent are either very worried or somewhat worried about having access to affordable, quality health care in their retirement years.
- More than three-quarters (77 percent) cite the fact that Medicare coverage is not available until age 65 as a very important consideration in deciding when to retire, and an additional 11 percent say it is a somewhat important consideration.
- Massachusetts baby boomers are looking to become more involved in the civic life of their communities; 60 percent say that they have volunteered over the past 12 months, and 71 percent expect to volunteer during their retirement years.
- Most Massachusetts boomers are long-time residents; 84 percent have lived in the Bay State for 20 years or more.
MassINC (The Massachusetts Institute for a New Commonwealth) is a nonpartisan, evidence-based organization. Its mission is to develop a public agenda for Massachusetts that promotes the growth and vitality of the middle class. Its governing philosophy is rooted in the ideals embodied in the American Dream: equality of opportunity, personal responsibility, and a strong commonwealth.
About Princeton Survey Research Associates International
PSRAI is an independent research company specializing in social and policy work. They design, conduct and analyze surveys worldwide. Their expertise also includes qualitative research and content analysis. With offices in Princeton, New Jersey, and Washington, D.C., PSRAI serves the needs of clients around the nation and the world.About Blue Cross Blue Shield of Massachusetts
Blue Cross Blue Shield of Massachusetts (BCBSMA) was founded 67 years ago by a group of community-minded business leaders. Today, headquartered in Boston, BCBSMA provides coverage to 2.8 million members. Consistently recognized for standards of service that are among the highest in the nation, Blue Cross Blue Shield of Massachusetts is the choice for health care consumers seeking reliable and high quality health care coverage. Blue Cross Blue Shield of Massachusetts is an independent licensee of the Blue Cross Blue Shield Association.