Prior to the Global Financial Crisis (GFC), Baby Boomers confidence in their futures hadn’t hit a significant hurdle since the Recessions of the 80’s and early 90’s. Now, with a large dent made in the majority of Australia’s 5.4 million Baby Boomers investments and Superannuation savings, Boomers are understandably more concerned about their futures, particularly those nearing retirement age, according to David Stevens, Social Analyst and Researcher for babyboomers.com.au.
“Running out of money at this time of their lives, is a real concern for a large number of Australia’s Baby Boomers”, says David. “With increased longevity rates, the reality is they could live much longer than their money can last them.” According to research analysed by Babyboomers Pty Ltd, there could be a serious poverty crisis looming for the Boomers within the next 15 to 20 years if we don’t rethink and adjust now.
Certainly there are signs that Baby Boomers are choosing to stay in the work force longer to make ends meet and set themselves up to be more financially secure. "The main financial security for a lot of Boomers is their own home", Says David, " which will provide them with an asset and equity, for those who have paid off their mortgage, but only if the property market continues to recover."
The latest AMP/NATSEM Income and Wealth Issue 24 Report, November 2009, supports these statements, finding that people are living longer and enjoying better health which has translated into very high retirement expectations. “We now expect to spend around 20 years in retirement after age 65 and we expect to indulge in the good life ….in reality our retirement expectations are out of step with our retirement savings. And Australians are not really saving enough to afford a comfortable retirement”.
David says Boomer women have been particularly affected by the GFC, as many had only small deposits in Super funds, which have contracted up to as much as 20%, and reduced their financial security even further. The AMP/NATSEM report affirms the plight of Boomer women, stating, “Again family responsibilities and motherhood have impacted on the personal savings for women, women have on average only six-tenths the personal savings of men. On average, women have just AU$79,100 while men have AU$132,200 - alarmingly women only have half the super of their male counterparts in all age groups from age 35 onwards”.
In Overseas research, a study by AlianzGI, "Retirement at Risk: Challenges for Baby Boomers approaching retirement," (October 2009) examined the retirement preparedness of our American counterparts who have seen their assets deteriorate significantly. Brigitte Miksa, Head of International Pensions at AllianzGI, says, "The recent economic crisis has demonstrated the vulnerability of retirement portfolios, especially of near and post-retirees who won’t have the time to sufficiently recover the losses....we now need to find solutions designed for retirement which will be sustainable across various market environments." The report added “...substantial wealth losses being highest for families at the lower end of the wealth spectrum....Baby Boomers will be increasingly affected by declines in Social Security benefits and a decreasing share of income from defined benefit pension plans“. Brian Gaffney, CEO of AllianzGI added "Our survey reveals a need for all of us to honestly reassess our vision of retirement and to develop realistic and sustainable retirement savings models. It’s important that we take to heart the lessons learned during this financial crisis and make small changes now to improve our likelihood for a secure retirement in the future."
The economic recovery is likely to be a roller coaster ride for most Australian Boomers according to financial analysts, and they won’t be drawn on whether we have seen the worst yet. However, the Boomers are not defeated lightly, says David, and they have a track record of bringing about significant social change, managing adaptation well. Having also survived a few financial market up and downs, such as the ‘recession we had to have’ in the early 90’s, they should be better prepared for the future.
“Baby Boomers are also looking for Regulatory Authorities and the Financial Sector to improve the guidelines and regulations to ensure that the GFC catastrophe doesn’t happen again, further undermining their financial security", says David. "They are looking for reliable information and advice to develop their own financial blueprint for their long term security.” The website babyboomers.com.au provides clear and easy to understand information and links on Government advice, seeking professional advice, licensed financial planners, and financial counseling for people experiencing difficulty, or wanting to plan out a new strategy. There are also tips on avoiding scams and what to look out for as internet offers and frauds continue to catch people out.
Baby Boomer Info byte: You would need to add the entire population of Generation ‘X’ and ‘Y’ to match the number of Australian Baby Boomers. (Source: ABS Generation to Generation 2006 data report 2009 – 20700)
Baby Boomers Pty Ltd
Babyboomers Pty Ltd operates the babyboomers.com.au website. The company was listed in 2000 and has been monitoring the needs of Baby Boomers and developing concepts and understanding around their needs since that time. David Stevens – Baby Boomer Social Analyst and Researcher has a background in psychology and research. His body of work includes research into the future needs of the Baby Boomers for health and ageing, lifestyle communities, and prevention over a 25-year period. This has included overseas study and research incorporating the population needs in the US, UK, and Asia.
Elisabeth Watkins, Media Liaison Officer, Babyboomers Pty Ltd.
P: 61 2 9225 7874