Baby Boomers pay too Little Attention to Retirement

Baby boomers pay little attention to planning for their retirement being more concerned with their children’s education and mortgage repayments
The research undertaken by financial planner and university professor Dr Malcolm Johnson consisted of interviewing people about their lifestyle expectations and what financial planners see as pertinent issues in retirement planning for clients.
He found

• Most people saw compulsory superannuation as the solution to maintaining their current lifestyles in retirement.
• People avoided financial planners because they didn’t think they had enough money to invest.
• They viewed the time of retiring as being when the aged pension became available not when they had enough money to live comfortably.

Lack of Preparedness

The lack of preparedness for retirement occurred in 44% of cases where people were only in receipt of the aged pension. Only 13% admitted to be living off savings and a further 12% reported superannuation as their main source of retirement income.
According to Johnson, anecdotal evidence in the financial planning industry suggests less than 10% of clients have a retirement plan that is adequately funded.
Those that do seek a plan are unable to explain what they want to do in retirement, which is combined with an unrealistic expectation of how it will be financed. He suggests that it raises the fear that clients are not making the connection between a well-financed retirement and their lifestyle expectation in their later years.
The research confirms the importance for financial planners to determine the core motives for potential retirees and relate this to the financial means that they will need to achieve this lifestyle. Johnson’s full research and conclusions were published in 2008 in the international Journal of Financial Services Marketing.

(Article appeared in the April 2009 edition of Financial Planning)