A recent poll conducted by Allstate found many American baby boomers are uncertain about their retirement plans due to the weak economy. Many believe they will have to stay in the workforce longer than originally planned to make sure they have enough saved for retirement.
According to the poll, the average baby boomer over the age of 50 expects to retire six years later than the age current retirees did, while 68 percent expect to work in some form after retirement out of financial necessity. Of the current retirees polled, only 11 percent report that they work.
Thomas Wilson, chairman and CEO of Allstate, said the recession strongly impacted the middle class baby boomers.
"Sandwiched between the happily retired and the optimistic young, these near-retirees feel the pain of their declining home values and retirement savings and expect to work until 66 years of age," said Wilson. "This profound decline in baby boomers' retirement expectations has significant public policy and private market implications."
The poll showed non-retirees differ from current retirees on their expectations about the sources of their retirement income and their financial security in retirement. In terms of social security, 68 percent of retirees say it is a major source of income, while 62 percent of near-retirees expect it to be. But 52 percent of current retirees consider pensions a major source of retirement income, while 37 percent of near-retirees expect pensions to help support them in retirement. Various financial planning tools including annuities and life insurance policies can help fund retirement plans.
With regards to part-time work, 34 percent of near-retirees believe it will be necessary to support themselves through retirement, but only 8 percent of current retirees work part time out of financial necessity. Seventy-nine percent of current retirees are confident about their retirement security, with 33 percent very confident. But only 67 percent of near-retirees are confident in their financial future, and just 19 percent say they are very confident.
For financial products being used to support retirement plans, 16 percent of current retirees depend on 401(k)s, and 39 percent of near-retirees expect to use them as a major source of income. IRAs are a major source of income for 18 percent of current retirees, and just 27 percent of near-retirees expect to use them.
Further, the current economic climate has pushed many Americans to believe a secure retirement is the result of hard work, savings and smart investment, rather than dealing with an unpredictable stock market. Many life insurance products can help safeguard consumers' funds from the volatile stock market and external economic factors.
With regard to their personal financial situations, Americans are slowly becoming more optimistic, with 44 percent predicting their finances will improve in the next 12 months and only 14 percent believing they will worsen.
In November, Americans showed more optimism in regards to the direction of the U.S. economy than in October. Fifty-six percent of Americans said they think the economy will improve in the next 12 months, compared with just 50 percent in October. In November, 36 percent of Americans said they believe the economy will be worse, compared with 46 percent in October.
Ronald Brownstein, editorial director of the National Journal Group, said many near-retirees are unable to find a sense of financial security that most current retirees felt as they approached their golden years.
"This survey captures a palpably greater degree of anxiety among near-retirees - families that have been exposed more directly to the battering of the job, housing, and stock markets," said Brownstein. "Many of them have been paddling so hard to stay above the waves of the Great Recession that they have difficulty imagining a time when they can confidently law down their oars."
With so much uncertainty surrounding the financial industry, consumers should invest their time and money in providers they trust. The Ameritas Group recently launched a more secure member website that features improved online benefit and claims information, as well as more security measures to enhance the customer experience.
For example, the remaining benefits link has been enhanced to provide more in-depth details on benefits such as coinsurance, deductible and maximum, and up-to-date information on remaining benefits on the policy. Consumers can enjoy a more robust claims search function that provides brief summaries of information as well as more detailed explanations so they can understand their options and policies.
In addition, Ameritas added a new section - Action Taken on this Claim - to its website to give consumers a snapshot of how claims are processed. Information in this section includes what the policy entails and who the beneficiary is on the policy. There is also an improved and more detailed version of the explanation of benefits - How Your Claim was Calculated - that creates valuable transparency for consumers who struggle to trust the financial industry.
MoneyWatch identified different ways baby boomers and other consumers can protect themselves from financial scams so their hard-earned funds can be put away for retirement. One red flag baby boomers can look out for is the notion that a financial planner or adviser has the secret to faster profits. The economy is struggling, so there are no get-rich-quick schemes succeeding. These offers are usually scams.
Further, the source recommends consumers stay away from unsolicited offers. Scammers work hard to make their schemes appear legitimate, and it is up to the consumer to know better. All investments should be thoroughly researched before any money is given, and speaking with professionals is a good way to find out if something is a scam or not.