Boomers: Can They Afford the Golden Years?
August 23, 2015| Von Jay Curran |
L/H General Industry
In Part I of this series, we explored the boomers’ mindset as consumers. In this segment we will examine who they are as employees and their use of technology, plus take a look at the financial picture for those entering their Golden Years.
Boomers in the Workplace
Our generation places high value on our vocations; oddly enough, we boomers live to work! We’re focused on working our way up the ladder and are prone to establishing self-worth and finding fulfillment via our chosen professions. Beyond our propensity to work hard and stay active with our careers, boomers are also likely to keep working due to insufficient levels of retirement savings and lost investments. In fact, 14% do not plan to retire at all as indicated in the chart below.1
As a member of the insurance industry for 20-plus years, I was shocked by the following:
"A poll by AARP revealed that 48% of companies have not, and will not, do any strategic planning to analyze the impact on their businesses of retirement by their boomer employees."2
I am sure we have all seen the Liberty Mutual television commercial with the youthful member calling out, “Hey Insurance Company!” FYI - not all boomers are retired yet, or will be retiring. That said, some companies are considering moving pre-retirees to public exchanges. Read our blog on what older consumers think about Insurance Exchanges.
The impact of boomers’ retirement may not be directly seen by insurers’ when evaluating their overall business but rather with the golden opportunity they could miss to engage and service the boomer segment, using agents who understand their life stage needs.
The delay of retirement age could end up being a win-win for insurers because - the boomers who stay at work in the insurance sector are helping our industry hold onto subject matter experts and retain valuable human capital within their organizations. For example, some carriers are tapping into retired underwriters during the peak underwriting season. Could this trend expand across the industry in other functional areas?
On a lighter note, let’s turn to my favorite topic as a boomer - technology! Yes, we dedicate ourselves to being the experts in our chosen professions. However, with a head down, work hard approach, it may seem like there’s no time for adapting, or should I say embracing - new technology. Speaking for myself - and raise your hand if you are the exception - who among us has asked a young person for help with their iPhone or iPad? I’m not too proud to admit that my 12-year-old daughter has been my personal technology guru for the last four years.
However, according to Jon Stein with Forbes:
"While they were not necessarily the earliest adopters of the Internet, the first users to have mobile connectivity, or the first ones to sign up for social networking, baby boomers growth rate in adoption and use of information and communications technology is higher than - and in some cases surpassing - that of younger generations."3
Don’t lose faith in boomers; while our tech abilities may not be at the highest level, it doesn’t mean we aren’t capable or interested. We simply prefer to use technology to supplement our overall experience, and many of us are actually proficient users.
Boomers and Their Finances
As we know, some boomers have already retired and are trying to manage their finances day to day, while others are approaching age 65 with difficult decisions ahead and concerns that retirement savings may not be adequate. In fact, 26% of boomers have no personal savings at all.4
For boomers who do have retirement savings, every action has a reaction. How will their 401(k) withdrawals affect the industry and the future of the next generation - Gen X? Withdrawals from 401(k) plans are now exceeding new contributions as baby boomers age, a shift that could have profound implications for the U.S. retirement industry.5
Collectively, boomers have plenty of living to do. That said, each of us has a personal responsibility to understand our finances. However, not everyone is prepared to assume this responsibility 100%. Therefore, the need for advisors is imperative. Financial advisors will be increasingly pressured for strategies that boost Social Security income, control healthcare expenses, and creatively arrange and draw on investments and other assets to extend retirement income. At the same time that baby boomers are demanding these new services, the financial planning industry is losing veteran advisors faster than they can be replenished. Financial advisors already report feeling stretched too thin, and they must find creative ways to survive in a less-wealthy, more-automated world.6
Boomers present a golden opportunity for the insurance industry to develop new strategies and services designed to engage boomers as the complexity of their needs go beyond traditional solutions.
Key takeaways for insurance professionals:
- Boomers are dedicated and hardworking.
- Boomers are still an integral part of the employee fabric.
- New strategies are needed to meet today’s boomers.
- Service and engage boomers to meet the complexity of their life stage needs.
1. Transamerica Center for Retirement Studies, Baby Boomer Workers Are Revolutionizing Retirement: Are They and Their Employees Ready?, 2014.
2. West Sound Workforce, How are Baby Boomers Affecting the Workplace?, 2015.
4. Governing, What Makes the Boomers the Boomers?, 2012; Harris Interactive Poll, Number of Americans Reporting No Personal or Retirement Savings Rises, 2011
6. Benzinga, Social Security and Medicare Emerging as New Foundation of Retirement Planning, But Few Advisors Ready.