Baby Boomers who already feel sandwiched between financial obligations to children and aging parents can look forward to more of the same, plus unprecedented levels of debt for themselves, in retirement. That is the sobering conclusion of the Allstate Financial "Retirement Reality Check," a survey released by Allstate Financial, a business unit of The Allstate Corporation.
According to the survey, more than one in three Baby Boomers (37 percent) will be financially responsible for parents or children during retirement. And 7 percent of boomers will be financially responsible for both parents and children in retirement.
That is on top of the extensive debt that three out of five Baby Boomers (58 percent) surveyed expect to pay off during retirement, including credit card debt, car notes, and mortgage on their home.
The survey also revealed that Baby Boomers have saved an average of only 12 percent of the total they will need to meet even basic living expenses in retirement.
According to the survey, one in five retired Baby Boomers will pay college tuition for one or more children. Fewer than one in ten (8 percent) of the boomers surveyed said they expect financial support from their children in retirement, though twice as many Boomers (16 percent) said they currently support their parents.
Baby Boomers not prepared to foot the bill.
On average, those surveyed said they would need $30,000 per year for basic living expenses during retirement. Factoring in a return on savings and inflation, to have that, Boomers will need approximately $1 million upon retirement. But surveyed Baby Boomers have saved only a fraction of that amount. Any benefits generated from the Social Security fund would lighten the savings need, but not nearly as much as Boomers would expect.
Even the $30,000 that Baby Boomers think they will need per year may be too low, as experts agree that the cost of living will likely double over the next 20 years. Of survey respondents, 46 percent thought that living expenses would increase less than 20 percent over the next 20 years, and only 6 percent agreed that the cost-of-living expenses would double.
Don't Quit Your Day Job
To defray costs associated with retirement, most Baby Boomers simply won't retire completely. Seventy-three percent of the respondents said they will continue to work in some capacity during retirement. And the majority of boomers surveyed (68 percent) said they would have to save money during retirement.
Astonishingly, despite numerous financial obligations and a massive savings shortfall, according to the survey, 67 percent of Baby Boomers still anticipate they will have money left over to leave as an inheritance to their children.
"This survey is a call to action for Americans," said Wilson. "The level of financial responsibility and obligation that this generation will face is unprecedented. When you compare what they have saved with what they will need, both for themselves and the others who will rely on them, this generation is woefully unprepared."
This Guest Article has been provided courtesy of Lifeinsurance.net
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