The baby boomers’ safety-valve
WE all would have read numerous reports of Australian baby boomers who have put their retirement plans on hold for several years and of retirees intending to return to the workforce, at least part-time. This is their understandable response to the GFC.
Steve Utkus, director of the Vanguard Centre for Retirement Research, would describe these baby boomers as exercising what he calls the “critical financial safety-valve for the baby boom generation”.
The 2010 Retirement Confidence Survey, recently published by the Employee Benefit Research Institute in the US, found that record-low confidence levels over the past two years appear to have bottomed-out. The annual surveys measure the confidence among American workers about having enough money to live on in retirement.
Given the results of the latest retirement confidence survey, Utkus believes it timely to refer back to previous comments he has made about the baby boomers’ safety-value. See the Vanguard publication, released this month, headed Retirement Ready – or not?
In short, Utkus says that baby boomers generally have higher incomes, better education, and better health than their parents. These factors may give them the ability to remain longer in the full-time workforce – or “downsize” to part-time work or less-demanding work rather than fully retire when initially planned.
This is the baby boomer safety-value.
For many near-retirees or those already in early retirement, the exercising of this extra-work alternative may, of course, involve a significant change in attitude.
And, of course, not all members of the baby boomer generation are in a position to extend their working lives. As with anything concerning finances and lifestyles, much goes back to personal circumstances.
The smartest way to be financially prepared for retirement is to begin saving enough as earlier as possible in a person’s working life.
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Robin Bowerman, Vanguard Investments Australia's Head of Retail, has more than two decades of experience in the finance industry as a writer, commentator and editor.