Giving in Retirement: America’s Longevity Bonus
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Over the next two decades there will be a surge in giving by retirees: America’s $8 trillion “Longevity Bonus.” Three forces are converging to create this new phenomenon:
- The movement of the massive boomer generation into their retirement years
- Increasing longevity, which means more people may spend more years in retirement. The aging of the boomers and increasing longevity will drive the age 65+ population up by 57% over the next two decades
- High rates of giving among retired men and women (especially women)—of both money and time
The impact of the “Longevity Bonus” is not only about how much retirees give, but also how they give. In 2015 Merrill Lynch and Age Wave launched the “Giving in Retirement: America’s Longevity Bonus” Study to understand the priorities, rewards, and challenges of giving in retirement. This study is based on a nationally representative survey of almost 3,700 respondents. Key findings include:
The $8 Trillion “Longevity Bonus”
- With more time, savings, and skills to contribute, two-thirds (65%) of retirees say retirement is the best time in life to give back.
- Although retirees account for less than a third (31%) of the adult U.S. population (age 25+), they contribute 42% of dollars given to charity and nearly half (45%) of total volunteer hours.
- Compared to before they retired, the majority of retirees say they now give in a way that is more focused, hands-on, and impact-oriented.
- Giving with impact is a priority for retirees. For retirees, “making a difference in the lives of others” is by far the top motivation to give, 5x more important than getting tax deductions.
- In total, the value of giving by retirees, including both charitable giving and the value of volunteer hours, will create an estimated $8 trillion Longevity Bonus over the next two decades.
Giving Gives Back
- Seven in ten (69%) of retirees say being generous is an important source of happiness in their retirement years. Retirees are 3x more likely to say “helping people in need” brings them greater happiness vs. “spending money on themselves.”
- Eighty-five percent of retiree volunteers say they have developed important new friendships through their giving and volunteering activities.
- Today’s retirees are almost 6x more likely to define success by their generosity, rather than their wealth.
Giving to Family
- 77% of retirees say they want to give throughout retirement, rather than leave an inheritance to their family at the end of life.
- Today’s retirees are 2x more likely to say it is very important to them to pass on “values and life lessons” vs. “financial assets and real estate.”
The More Generous Gender
- Women are more likely than retired men to say that retirement is the best time in life to give back (68% vs. 62%).
- Compared to retired men, retired women are both more likely to contribute financially (81% vs. 71%) and to volunteer their time (29% vs. 22%) to charities, nonprofits, and causes.
- Married women are more likely than their husbands to take the lead on many giving decisions.
- When it comes to passing money on, retired women are even more likely than retired men to say they prefer to give money to family members while still alive, rather than passing it on as an inheritance (81% vs. 73%).
- Among people age 55+, single women, including those who are widowed, divorced, or never married, already contribute nearly half (49%) of all charitable bequests.
A Game Plan for Greater Giving
Today’s giving landscape is complex, but with a sound game plan retirees can give with the greatest impact and personal fulfillment. This game plan can include three important steps.
- Explore your giving goals
- Optimize your impact
- Assess and refine your giving game plan
When asked what is most important in the ideal giving guide or advisor, retirees say they are looking for someone who “understands my values and priorities.”
For the full study, please visit www.ml.com/retirementstudy.
