Retirement at the Tipping Point: The Year That Changed Everything

The recent economic reckoning has created vast financial losses and uncertainty during the last year, triggering all generations to reassess the funding, timing and purpose of retirement. Many Americans are now asking some tough questions: How can I go about rebuilding my savings? Will I be able to retire when I planned to? Will I be able to retire at all? How can I re-craft my retirement plans and preparation with a new perspective, understanding, and vision of what retirement might be?

To learn precisely how these disruptions have altered Americans’ retirement hopes, worries, and needs, Age Wave launched a national survey, Retirement at the Tipping Point: The Year That Changed Everything. This study included a national survey conducted online in March 2009 by Harris Interactive among 2,082 respondents spanning four generations: the Silent Generation (ages 64 to 84), the Baby Boomers (ages 45 to 63), Generation X (ages 33 to 44), and Millennials (ages 21 to 32). In addition, we examine several major changes over the past year by comparing insights from this survey with results from Rethinking Retirement™, a survey Age Wave conducted in collaboration with Charles Schwab Corporation and Harris Interactive exactly one year earlier.

The results uncovered mounting fears and shifting plans, but also a renewed focus on what’s important and an optimistic outlook about the possibilities for retirees’ new role in American life. Retirement at the Tipping Point revealed four key illuminating and provocative findings, including:

#1: Resetting the Retirement Clock

• Seven-Year Money Setback – Nearly 60% of Americans have lost money in the mutual funds, 401(k) plans, or the stock market. Respondents think it will take an average of seven years for their investments to recover.
• #1 Fear: Uncovered Medical Costs are the Retirement Wildcard – The single biggest worry among those 55+ is that they will be unable to afford uncovered medical expenses (46%). This is now a greater concern than either lack of personal savings (18%) or uncertain entitlements (11%).
• Retirement Postponed – For the first time in U.S. history, we may witness a significant increase in the retirement age as respondents say on average they will now need to postpone retirement by 4.2 years – which will also adjust the “work-to-retirement ratio.”

#2: Needed: Financial Rehab

• Lessons Learned – Only 4% of respondents strongly agree that Americans behave in a financially responsible fashion. 81% said that to “live within your means” was the most important financial advice parents could pass on to their children – jumping up from 69% a year ago. “Begin saving at an early age” came in second (65%).
• A Call for Financial Fitness at Every Age – An overwhelming 95% of respondents agree that financial management should be a standard part of high school curricula. Although 35 states mandate sex education, only three – Utah, Tennessee and Missouri – have, to date, made personal finance courses a requirement.
• Seeking Financial Peace of Mind – A majority of all survey participants (56%) agree that the best thing about having money is “feeling secure.” In recent months, we have seen Americans go “back to basics” as evidenced by an increase in the savings rate – now over 4%, twice the savings rate over the past decade, and household credit card debt has dropped almost 10% from the prior year.

#3: Am I My Brother’s Keeper?

• What We Value Most – The majority of respondents (58%) said that loving family and relationships are at the heart of what we hold most dear today – twice as important as being wealthy (33%) and twenty times more important than wielding power and influence (3%).
• Brother Can You Spare a Dime (or $50,000, or a bedroom)? With growing uncertainty about both government benefits and work security, millions of men and women are turning back to their families for financial assistance.
• The Sandwich Generation has Turned Into Multigenerational “Rubik” Families – Four out of ten respondents now worry they will have to financially support their parents or in-laws. This growing interdependence extends to siblings, with nearly a quarter of Millennials worrying they will need to provide care and support for siblings as well.

#4: Retirement Finds a New Purpose

• Out of the Ashes, New Possibilities – A new and, in some ways, more optimistic vision for retirement is emerging. 60% of Americans now say they view retirement to be “a new, exciting chapter in life” contrasted with 52% last year. And, 70% want to include working in retirement as a way to contribute, remain stimulated and pay the bills.
• Sage Elders Needed – Three-quarters of all respondents think our country would benefit in important ways if retirees were more involved in contributing their valuable skills and experience to our communities, with the most enthusiastic response coming from retirees themselves (83%).
• The Emergence of Philanthropreneuring – With growing interest in civic engagement, the majority (57%) of respondents would prefer a volunteer activity that makes use of their full range of work and life skills and experience – rather than basic service and support tasks.