Although many baby boomers expect to retire before they turn 70, a new survey suggests some of them may need to rethink their options.
Clever Real Estate, a marketplace for real estate agents, surveyed 1,000 consumers to ask about their saving habits and retirement plan contributions. The average boomer in the survey sample was 62 years old and planned to retire by the time they turned 68.
However, this retirement goal may be out of reach for some, as the survey also found the average boomer had only $136,779 saved up. Clever Real Estate cited experts as recommending consumers have eight times their annual income saved by the time they reach 60. Using the median income among survey respondents of $57,000, the recommended amount would be $456,000, far above the average savings found in the survey.
One reason boomers may not be saving more for retirement is that their finances are being stretched in a lot of different directions. For example, 40% are paying off credit card debt; that’s taking away money that could be going toward savings.
On top of that, nearly one third — 31% — of boomers admitted to not having an emergency fund, so an unexpected expense could lead some boomers down the pathway to even more debt. Another 31% of boomers had enough saved to cover their expenses for between one and two months, while 24% had three to four months’ worth of expenses saved. Only 14% of boomer respondents had five or more months of expected costs saved up in an emergency fund.
With boomers struggling so much financially, it may seem counterintuitive that so many of them expect to retire by the time they reach 68. Yet one survey finding may explain their optimism: More than half of boomer respondents — 59% — said they expect Social Security to be a major source of income when they stop working.
Unfortunately, baby boomers face a number of financial challenges as they approach retirement age. For example, the amount of debt owed by those over 65 has been increasing steadily over the last couple of decades.
It’s important for consumers of all ages to check regularly to see if they are on track for retirement — and to do this, you have to know how much you’ll need to retire in the first place. If you’re not on track, consider raising your income (maybe with a side hustle) or downsizing via a budget, so you can increase your retirement savings.