STUDY. Boomer Bookends. Insights Into the Oldest and Youngest Boomers

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1 STUDY Boomer Bookends Insights Into the Oldest and Youngest Boomers FEBRUARY 2009

2 The MetLife Mature Market Institute Established in 1997, the Mature Market Institute (MMI) is MetLife s research organization and a recognized thought leader on the multi-dimensional and multi-generational issues of aging and longevity. MMI s groundbreaking research, gerontology expertise, national partnerships, and educational materials work to expand the knowledge and choices for those in, approaching, or caring for those in the mature market. MMI supports MetLife s long-standing commitment to identifying emerging issues and innovative solutions for the challenges of life. MetLife, a subsidiary of MetLife, Inc. (NYSE: MET), is a leading provider of insurance and financial services to individual and institutional customers. For more information about the MetLife Mature Market Institute, please visit: Contact us: MetLife Mature Market Institute 57 Greens Farms Road Westport, CT (203) Fax (203) MatureMarketInstitute@MetLife.com GfK Custom Research North America Headquartered in New York, GfK Custom Research North America is part of the GfK Group, the world s fourth largest market research company. GfK Custom Research North America combines the global resources of the GfK Group with the local knowledge of North America s leading research and consulting companies delivered by more than 700 employees in the U.S. and Canada MetLife

3 Table of Contents Introduction and Key Findings...4 Overview...4 The Oldest and Youngest Boomers: Two Generations in One...4 Summary of Key Findings...5 The Oldest Boomers: Today & What s Changed Since Relationships...7 Health...7 Employment/Retirement...7 Housing...10 Finances...10 The Youngest Boomers: Today & How They Compare to the Oldest Boomers...13 Relationships...13 Health...14 Employment/Retirement...15 Generational Identity...16 Advantages and Disadvantages of Getting Older...17 Housing...17 Finances...18 Summary and Implications...23 Methodology...25 Appendix...26 Boomer Bookends: Insights Into the Oldest and Youngest Boomers 3

4 Introduction and Key Findings Overview The Mature Market Institute (MMI) study, Boomer Bookends: Insights Into the Oldest and Youngest Boomers, compares the leading edge Boomers (those born in 1946) and the trailing edge Boomers (those born in 1964). This is the second year in a row that the MMI conducted a nationally representative survey of the Oldest Boomers, those turning age 63 in The sample included respondents from the 2007 MMI study, Boomers: Ready to Launch, who agreed to be re-contacted, as well as additional new respondents. In this study, to compare and contrast the Oldest and Youngest members of the Boomer generation, the MMI also conducted a comparable nationally representative survey of the trailing edge Boomers, those turning age 45 in Asking many of the same questions to each group, the MMI found that they share many traits and perspectives in common, yet have different attitudes, life experiences, and goals, just as oldest and youngest siblings do in the typical American family. The Oldest and Youngest Boomers: Two Generations in One The Boomers are a large generation with an 18-year age spread that began when the GIs returned from World War II in Some consider it two generations in one. Many more Boomers were born in the later years of the Boomer generation than in the earlier years. The Older Boomers, born between 1946 and 1955, represent 36.7 million, of which 2.7 million were born in The Younger Boomers, born between 1956 and 1964, represent 40.6 million, of which 4.6 million were born in Despite the somewhat smaller numbers, the Oldest Boomers have received most of the attention in the media and literature about the generation. The Oldest Boomers, who were often associated with a rebellious and influential youth culture, are now facing the contrast of growing up in the sixties, and now living through their sixties. As children, they tended to live in more traditional households, with a stay-at-home mother. The economy was good, and the baby boom resulted in the growth of the suburbs, schools, and consumer demand. By the time the Oldest Boomers the high school class of 1964 entered early adulthood, they found themselves at the forefront of a decade of both social unrest as well as social Graph 1: Number of Live Births in the United States from Births (in millions) Source: U.S. Department of Health & Human Services, Centers for Disease Control and Prevention. 4

5 progress. Now they have reached a new stage of life where their primary careers are winding down, and they are figuring out what they will do when they retire and how to pay for it. The Youngest Boomers, on the other hand, are now middle-age, are at their peak earning years, and have younger children still at home. Like the Oldest Boomers, they were influenced by their experiences as children and young adults, but they grew up in different times. Instead of living in families where their mothers stayed at home to raise the family, they were more likely to be latchkey children. Women were entering the workforce in growing numbers, and the divorce rate was increasing. The economy was not as strong as it had been when the Oldest Boomers were growing up, so in contrast to the older cohort, they were less likely to believe that the world was full of opportunity. Now, as they look to the future, they understand that they very likely will not have a Defined Benefit Plan and will need to take more responsibility for their own financial future. The life stages and life experiences of these two Boomer groups are very different, resulting in an interesting comparison of how they view relationships, health, employment, retirement, and finances. Yet they share the same generation, and by sheer size alone, they have influenced the social, political, and cultural agenda of the nation. Summary of Key Findings Overall, the fact that the Oldest and Youngest Boomers the Boomer Bookends are quite different is not particularly surprising, especially when the reality of the 18-year age span and the Current Census Bureau estimates indicate that there are 70% more Youngest Boomers (4.6 million) than Oldest Boomers (2.7 million). vastly different social climates of their formative years are considered. The results point to the mistake that many people make of either looking at the Boomers as one monolithic group or not recognizing the dramatic shift in attitudes and behaviors that took place during this transitional generation. A large majority of the Oldest Boomers embrace the Boomer moniker as a description of their generation. However, almost half of the Youngest Boomers do not like being associated as a Baby Boomer, and, in fact, about one-third prefer to be seen as part of Generation X, the cohort immediately following the Boomer demographic. The Oldest Boomers 2008 Few of the Oldest Boomers surveyed have fully retired. A majority remain in the workforce, half work full-time. They report being healthy although health issues are beginning to play a major role in their capacity to work, and a leading concern is affordable health care. In reflecting on their family life, they feel that they have done a good job of caring for themselves, their loved ones, and their communities. In fact, almost six in ten have provided considerable financial assistance to their children and grandchildren in the past five years. A somewhat surprising fact is that, despite the economy, nearly a quarter say they have no concerns about retirement. The Oldest Boomers: What s Changed from 2007 to 2008? The re-contacted Oldest Boomers have actually stayed the course, despite a year of tremendous financial market upheaval. Boomer Bookends: Insights Into the Oldest and Youngest Boomers 5

6 Introduction and Key Findings Of those who said they planned to take Social Security retirement benefits at age 62, the majority did. Similarly, of the Oldest Boomers who indicated that they would apply for Social Security retirement benefits at age 63 or later, the majority of these respondents have not changed their plans. Only about one in ten had a change in their employment status in the last year or was planning for the change before the end of Despite their age and the fact that they do not have as many years to catch up as their younger counterparts, a small percentage of these Boomers report achieving their retirement savings goals, and nearly half say they are behind in their retirement savings. The Boomer Bookends and How They Differ A large percentage of Youngest Boomers disassociate themselves from being a Boomer and would rather consider themselves as Generation X, while Oldest Boomers generally like the Boomer connection. The Youngest report that they will consider themselves old at age 71 while their older counterparts say 78 is old. Most do not plan on taking Social Security benefits at age 62, but instead plan to take it at 64. Yet, most believe that they will be able to fully retire by age 64, in contrast to the Oldest Boomers who plan to retire at age 66. The two groups differ on concerns about retirement. The biggest concerns of the Youngest Boomers are outliving retirement money and having to work full- or part-time. The Oldest Boomers biggest concerns, by contrast, are being able to afford health care and staying productive and useful. However, a quarter report having no concerns. The Youngest Boomers expect to rely on Social Security for a third of their income in retirement. Born in 1946, Former First Lady Laura Bush is an Oldest Boomer. Born in 1964, First Lady Michelle Obama is a Youngest Boomer.* *Neither endorses this study. 6

7 The Oldest Boomers: Today & What s Changed Since 2007 Relationships Similar to what was found in 2007, the Oldest Boomers today have an average of 2.1 children and 2.6 grandchildren and are primarily empty nesters, with few dependents living at home. Of those with children, about one in five (19%) have children living with them. Over three-quarters (77%) of the Oldest Boomers surveyed have grandchildren. With regard to their parents, two-thirds (67%) do not have a living parent. One-third (33%) have at least one parent living. Of those with at least one parent alive, one in seven (14%) are providing regular care to a parent/relative, spending an average of 11 hours per week providing care. In fact, almost one-quarter (23%) of those providing regular care are spending more than 20 hours a week doing so (see Figure 1). What s Changed The Oldest Boomers experienced few major family changes in the past year, except for having more grandchildren. About one in five (17%) had more grandchildren in the past year. There also has been little change with regard to their parents. Just 2% lost a parent in the last year. Health Compared to 2007, their health has remained rather consistent. When asked to rate their health in 2008 compared to 2007, 70% of respondents rated their general health as unchanged. Of the respondents whose health had changed, 17% reported their health as being better, and 13% reported it as being worse. Among those who said it is worse, 40% had a major health problem. Employment/Retirement Fifty percent of Oldest Boomers are working full-time. Only about one-fifth (19%) are fully retired. One in ten (11%) are on Disability and 9% are currently collecting Social Security retirement benefits. Of those working full-time, 15% plan on making a career change either before or after they retire, with more than half Figure 1: Providing Regular Care to a Parent or Relative Oldest Boomers Are you and/or your spouse/domestic partner currently providing regular care to a parent or relative older than 65? How many hours per week are spent providing this regular care?* Yes No 86% 14% Less than 2 hours 2-4 hours 5-7 hours 8-10 hours hours hours More than 20 hours 11% 21% 14% 14% 9% 5% 23% *Asked of those who indicated that they currently provide regular care to a parent or relative older than 65. Boomer Bookends: Insights Into the Oldest and Youngest Boomers 7

8 The Oldest Boomers: Today & What s Changed Since 2007 Figure 2: Current Employment Status* Oldest Boomers Employed full-time Fully retired, not working On Disability Retired but working part-time/seasonally Self-employed Employed part-time Looking for work 50% 19% 11% 9% 4% 3% 2% *Asked of both re-contacted and new respondents. of these (56%) reporting they would make this change after retiring. Only 2% report they are looking for work (see Figure 2). When asked what their biggest concerns regarding retirement are, the two most often reported among the Oldest Boomers were being able to afford health care in retirement (18%) and staying productive and useful (18%). What s Changed One in ten (11%) of the re-contacted Oldest Boomers had a change in their employment status in the last year or was planning for a change before the end of Of those, over one-quarter (28%) are now fully-retired, 27% are now working full-time, and 14% are now retired, but working part-time or seasonally. Figure 3: Reason for Not Retiring at 62 As Planned* Oldest Boomers Not 62 yet 32% Economy/ stock market 26% Need the money/income 20% Like to work/ bored not working 17% *Asked of re-contacted respondents who indicated that they were planning to retire in 2008 and did not. Multiple responses permitted. 8

9 Retirement plans for some of the Oldest Boomers have changed since last year. A very small percentage (11%) of those re-contacted said in last year s survey that they planned to retire fully at age 62. Of those, only 15% actually retired fully in Six percent retired, but are working part-time or seasonally. Others are still working but went from full- to part-time or vice versa or are now on Disability. Seventy-one percent of this small group who planned to retire fully at age 62 did not. Of those, one-quarter (26%) reported the current economic situation as the reason. One in five (20%) reported they need the money or income. Slightly less (17%) said they like to work and/or are bored not working (see Figure 3). Interestingly, the reason given most was Not 62 yet. This is confirmed by vital statistics data from the U.S. Department of Health & Human Services, 31% of the births in 1946 were in the months of October through December. For those who originally planned to retire fully after age 62, fewer have changed their plans. Two out of five (38%) of those re-contacted were planning to retire fully at age 63 or later when asked in the 2007 survey. Of those, two-thirds (67%) have not changed their planned retirement age. However, 31% plan to retire later than they reported last year, and only 2% plan to retire earlier. There is considerable difference between plans to access Social Security at age 62 and plans to retire at that age as referenced above. Since 2007, plans on when to start collecting Social Security benefits have changed for a small minority of respondents. Almost one-quarter (23%) of those re-contacted said last year that they planned on taking their Social Security benefits at age 62 (see Figure 4). Of those, 75% have done so or are planning to before the end of Of the 22% who have since decided not to collect Social Security this year, 33% report that they are not ready to retire, or prefer to keep working. Almost one-quarter (24%) say they need the employment income. Figure 4: Social Security Retirement Benefits* Oldest Boomers Last year, you told us you were planning to take your Social Security retirement benefits at age Can you please tell us why you decided not to collect Social Security? 62. Are you collecting now or going to apply for Social Security by December 31, 2008? Not ready to retire/ prefer to keep working 33% 3% Need the employment 22% 24% income Not eligible yet/not 62 yet Need health/medical 75% insurance Yes Want to wait/build up No entitlement 17% 16% 8% Don t know Penalty on earnings if retire early 5% *Asked of re-contacted respondents only. Asked of those who indicated that they were planning to take Social Security at age 62 in Asked of those who indicated that they were planning to take Social Security at age 62 in 2007 and did not. Multiple responses permitted. Boomer Bookends: Insights Into the Oldest and Youngest Boomers 9

10 The Oldest Boomers: Today & What s Changed Since 2007 Almost half (48%) of the re-contacted Oldest Boomers indicated in 2007 that they would collect Social Security after age 62. Since last year, the majority of these respondents (80%) have not changed their plans. However, 17% indicated that they plan to collect Social Security benefits later than originally planned, and 3% indicated they would collect Social Security benefits earlier than originally planned. Respondents who are delaying collecting Social Security beyond their planned date are doing so to keep on working to earn more income. More than two in five respondents (44%) who have delayed when they will collect their Social Security benefits are doing so for the employment income. Three percent are collecting later in order to pay bills and for living expenses. Those who are going to collect earlier are doing so for health reasons. Most respondents who are planning to collect earlier indicated they are doing so because they are disabled (28%) or for health reasons (18%). Eight percent reported that they are collecting earlier than planned as a personal preference because they can, or want to. Although a great majority (82%) of the Oldest Boomers like the word retirement to describe their next life stage, those who did not like the word retirement last year have not been mollified by moving closer to it. Of the 18% who did not like the word retirement to describe their next life transition in 2007, 84% still do not like the word while 8% now like it somewhat. Only 7% like it more now than last year. Housing The majority of the Oldest Boomers surveyed (85%) are homeowners. They value their current home at $269,300 on average. As would be expected in light of the economic circumstances in 2008 compared to 2007, their reported housing value has declined from the 2007 average value of $297,900. A vast majority (97%) of the re-contacted respondents from 2007 have remained in their homes since last year. Only a small fraction (3%) moved or sold their homes in the past year. Onequarter (23%) of respondents surveyed have moved in the last year or are planning to move sometime in the future. One-third (33%) of them have downsized or are downsizing to a smaller home. A small percentage (9%) moved or are planning to move to an active adult community. Finances Overall, the Oldest Boomers surveyed own an average of six financial products, and earn an average household income (many are dual-income households) of $71,300 annually. The three most common financial products owned are life insurance (81%), health insurance (76%), and CDs/savings accounts (76%). One-quarter of the respondents (25%) own long-term care insurance, and more than one-third (37%) own an annuity (see Figure 5). The Oldest Boomers report an average household net worth of $236,700 in 2008 compared to $257,800 in 2007, an 8% decrease in reported net worth during the past year. Only one in five (19%) of all Oldest Boomers has already received an inheritance from their parents. Of the 32% who have not already received an inheritance and have at least one parent still living, a quarter (27%) still expect to receive one. The average inheritance expected is $185,800. A quarter (26%) of those expecting an inheritance are expecting less than $50,000. A new finding is that many of the respondents have helped out their families financially. Nearly six in ten (57%) say they have provided financial assistance to their children or grandchildren in the last five years, averaging $59,000 over that period. The median amount (i.e., 50% provided more, and 50% provided less) was $30,600. More than three- 10

11 Figure 5: Financial Products Owned* Life insurance Health insurance CD/savings account 401(k)/403(b)/retirement plan IRA Defined benefit pension plan Stocks Mutual funds Disability insurance Annuity Bonds Long-term care insurance SEP or money purchase plan *Asked of both re-contacted and new respondents. 81% 76% 76% 54% 51% 49% 40% 38% 37% 37% 27% 25% 3% Mean: 6 products quarters (80%) indicated, however, that they have provided less than $50,000 in financial assistance. In terms of planning for retirement, almost six in ten (58%) respondents have tried to calculate the monthly income they will need to live comfortably in retirement. Specifically, more males (63%) have calculated needed monthly income in comparison to females (53%). While some respondents have delayed when they will retire, only 38% are on track or have reached their retirement savings goals, and 44% are behind (see Figure 6). In fact, 15% are significantly behind Figure 6: Perceptions of Progress Toward Retirement Savings Goals* Oldest Boomers Do not have goals 15% Have not started 2% Significantly behind 15% Somewhat behind 29% On track for reaching goals 25% Already achieved goals 13% *Asked of both re-contacted and new respondents. 29% Fully retired 6% Working full-time Boomer Bookends: Insights Into the Oldest and Youngest Boomers 11

12 The Oldest Boomers: Today & What s Changed Since 2007 and 2% have not yet started. Of those who have already achieved their goals, 29% are fully retired, while only 6% are working full-time. In terms of planning for retirement, over one-third (36%) of the Oldest Boomers sought advice from a professional financial advisor within the past year. What s Changed In 2007, more respondents stated they would purchase life insurance, long-term care insurance, or a CD/savings account than actually did in While 11% of respondents in the 2007 survey planned on purchasing life insurance in 2008, only 1% of respondents re-contacted actually did. About 7% of respondents in the 2007 survey planned on purchasing a CD/savings account, but only 1% of those re-contacted actually did. Finally, 6% of respondents in the 2007 survey planned on purchasing long-term care insurance, while only 2% of those re-contacted actually did (see Figure 7). Not surprisingly, since few respondents lost a parent in the last year, very few (2%) received an inheritance within the last twelve months. Those who did, received an average inheritance of $113,000. Only a handful of respondents actually took a reverse mortgage in 2008 when they became eligible. Of the homeowners who were recontacted from the 2007 study, only 1% took a reverse mortgage when initially eligible. Furthermore, of the homeowners who did not take a reverse mortgage during their first year of eligibility, 18% would consider using a reverse mortgage in the future. Figure 7: Financial Products Purchased in Past 12 Months* Oldest Boomers Stocks Bonds Disability insurance Mutual funds Long-term care insurance Annuity Life insurance CD/savings account 4% 3% 3% 2% 2% 2% 2% 4% 2% 6% 2% 2% 1% 11% 1% 7% 2007 Planned 2008 Actual *Asked of re-contacted respondents only. 12

13 The Youngest Boomers: Today & How They Compare to the Oldest Boomers Relationships The Youngest and Oldest Boomers are similar in terms of the number of children they have, but they are clearly at different life stages. The Youngest Boomers have young children living at home while the Oldest Boomers have adult children and grandchildren, and are typically empty nesters. The majority (81%) of the Oldest Boomers do not have any children living with them, compared to 12% of the Youngest Boomers. Further, the majority (77%) of the Oldest Boomers have grandchildren while only 14% of the Youngest Boomers do. Another difference between them is that the Youngest Boomers are more likely to have both parents still living compared to the Oldest Boomers (see Figure 8). A little more than half (55%) of the Youngest Boomers have both parents still alive compared to only 4% of the Oldest Boomers. A larger portion (67%) of the Oldest Boomers compared to the Youngest Boomers (11%) do not have either parent still alive. Even though fewer of the Oldest Boomers have living parents, a similar number of the Youngest Boomers (17%) and Oldest Boomers (14%) are providing care to a parent or older relative. The Youngest Boomers spend on average 9.1 hours per week providing care while the Oldest Boomers spend on average 11 hours per week. Almost one-quarter (23%) of the Oldest Boomers who are providing regular care are spending more than 20 hours a week, while only 12% of the Youngest Boomers are spending more than 20 hours a week providing regular care. Figure 8: Parents* Youngest Boomers 11% Oldest Boomers 35% 67% 55% 29% 4% Both still alive Only one is still alive Neither are still alive *Asked of re-contacted and new 2008 respondents. Boomer Bookends: Insights Into the Oldest and Youngest Boomers 13

14 The Youngest Boomers: Today & How They Compare to the Oldest Boomers Figure 9: Self-Evaluation Excellent/VeRY Good Job (5 and 4 on a 5-point scale) Providing for your spouse s/partner s/children s needs Maintaining your health for your future well-being Providing for your personal needs Contributing to your community Ensuring you have a steady stream of income in retirement Providing for your parent s needs Saving and investing for your future Planning on how to live your early retirement years to the fullest Saving and investing for your children s future Ensuring that you have coverage for long-term care costs 51% 50% 39% 40% 34% 41% 32% 33% 23% 35% 23% 29% 21% 31% 21% 31% 21% 25% 14% 19% Youngest Boomers Oldest Boomers* *Responses are from the 2007 survey of Oldest Boomers. Responses from those with spouses/partners/parents/children. When asked to rate how well they have done in providing for their families and themselves, respondents in both groups were most likely to report doing an excellent or very good job (see Figure 9). On the other hand, respondents in both groups were least likely to report doing an excellent or very good job of ensuring that they have coverage for their own long-term care costs. Health Overall, 65% of the Youngest Boomers rated their health as excellent to very good, compared to just under half (49%) of the Oldest Boomers. Only 7% of the Youngest Boomers had any major health problems in the past year, while this number doubled for the Oldest Boomers (14%). Personal health is a key issue as respondents among both groups say it is the most influential factor in terms of affecting their life expectancy (see Figure 10). Thirty-seven percent of both Youngest and Oldest Boomers indicated that their personal health most influences how long they think they will live. 14

15 Figure 10: What Most Influences Thinking How Long They Will Live* Personal health Age of death of parents or grandparents Personal attitude or perspective on life Religious beliefs Life expectancy for someone your age Number of living parents or grandparents Age of death of friends 37% 37% 23% 25% 16% 17% 10% 11% 6% 7% 6% 2% 1% 1% Youngest Boomers Oldest Boomers *Responses are from the 2007 survey of Oldest Boomers. While the number of living parents or grandparents is more of an influence for the Youngest Boomers than the Oldest Boomers (6% versus 2%), both groups are relatively equal in what influences how long they think they will live. Employment/Retirement Overall, the Oldest Boomers plan to retire at an older age than do the Youngest Boomers. Contrary to the belief that Boomers want to work later than the traditional retirement age of 65, the Youngest Boomers believe they will be able to fully retire at age 65, although later than 64, the age at which they plan to retire. The Oldest Boomers plan to retire at age 66. In the 2007 survey, 31% of the Oldest Boomers planned on taking their Social Security benefits at age 62, while only 18% of the Youngest Boomers plan to at this age. More of the Youngest Boomers (69% versus 49% of the Oldest Boomers) plan to take Social Security when they are 64 or older. The Oldest Boomers appear to be more informed about when they can collect full Social Security benefits. For younger boomers born after 1953, the age at which they can collect full Social Security retirement benefits is age 67. The two groups differ on their concerns about retirement as well: Outliving retirement money (18%) and having to work full- or parttime (17%) are the biggest concerns among Youngest Boomers, while the Oldest Boomers biggest concerns are being able to afford health care (18%) and staying productive and useful in their retirement years (18%). Boomer Bookends: Insights Into the Oldest and Youngest Boomers 15

16 The Youngest Boomers: Today & How They Compare to the Oldest Boomers It is clear that the two groups are in different life stages. One-quarter (24%) of the Oldest Boomers, despite being in or close to retirement, have no major concern regarding it, compared to 8% of the Youngest Boomers (see Figure 11). Almost half (49%) of the Oldest Boomers have a defined benefit pension plan, which may be a reason for their relatively lower level of concern about retirement. When taking annual household income into account, some additional differences emerge between the Youngest Boomers and Oldest Boomers. Interestingly, for the Youngest Boomers, outliving retirement money was most often selected among respondents who earn $100K to just under $200K a year (24%), while having to work in retirement was most often selected among respondents who earn $50K to just under $100K a year (20%) and those who earn $25K to just under $50K a year (23%). On the other hand, the Oldest Boomers most often reported no concern, regardless of income level. For those who did report a concern, staying productive and useful was most often selected among respondents who earn $100K to just under $200K a year (20%) and among respondents who earn $50K to just under $100K a year (19%). Being able to afford health care was most often selected among respondents who earn $25K to just under $50K a year (25%). Generational Identity Nearly half of the Youngest Boomers (48%) do not like the term Baby Boomer to describe themselves at their age, compared to only 17% of the Oldest Boomers (see Figure 12). The Youngest Boomers also overwhelmingly (89%) reject the description of Generation Jones or Joneser to characterize their perception of a generational identifier. Figure 11: Biggest Concern Regarding Retirement* Outliving retirement money Having to work full-time or part-time to live comfortably in retirement years Being able to afford health care in your retirement years Providing for your own/spouse s/partner s long-term care needs Staying productive and useful Having a comprehensive financial plan for retirement No concern 18% 12% 17% 10% 15% 18% 15% 13% 14% 18% 12% 4% 8% 24% Youngest Boomers Oldest Boomers *Asked of both re-contacted and new respondents. 16

17 Figure 12: Perception of the Term Baby Boomer Youngest Boomers 5% Oldest Boomers* 17% 48% 38% 26% 20% 45% Yes, I like it I don t like it I like it somewhat Don t know *Responses are from the 2007 survey of Oldest Boomers. Over one-third (35%) of the Youngest Boomers prefer Generation X (those age 32 to 43 in 2008) to describe themselves, a term associated with the generational cohort immediately following the Boomers. While the Oldest and Youngest Boomers are demographically in the same generation, a significant percentage of the youngest clearly consider themselves apart from the other end of the generational spectrum. When asked of their opinion regarding the word retirement to describe their next life transition, a large majority of both the Oldest Boomers (82%) and the Youngest Boomers (78%) like or somewhat like the word. About one in five of both the Oldest Boomers (18%) and the Youngest Boomers (20%) do not like the word. Advantages and Disadvantages of Getting Older Consistent with popular observation, it appears that the older you are the older you have to be to be considered old. On average the Youngest Boomers say they would have to be 71 years old to be considered old, while the Oldest Boomers said they would have to be 78 years old. The top mentions for the best thing about being 45 were wisdom and still being alive. Similarly, the Oldest Boomers top mentions for the best thing about being 62 were still being alive and retirement/not having to work. The top mention for the worst thing about being both 45 and 62 was old age/getting older (see Figure 13). It appears the older you are the older you have to be to be considered old. Housing Nearly nine in ten of the Youngest Boomers (88%) and Oldest Boomers (85%) are homeowners. Younger homeowners placed a greater value on their current home in comparison to Boomer Bookends: Insights Into the Oldest and Youngest Boomers 17

18 The Youngest Boomers: Today & How They Compare to the Oldest Boomers Figure 13: Worst Thing About Being 45 and 62* 45 Top Mentions (3% and over) 62 Top Mentions (3% and over) Old age/getting older Aches/pains/stiffness Appearance/physical changes Middle age/mid-life crisis Health problems Wrinkles Not being <age> anymore Being closer to <age> 16% 7% 5% 4% 3% 3% 3% 3% *Responses are from the 2007 survey of Oldest Boomers. Old age/getting older Health problems Aches/pains/stiffness Aging Death/closer to dying Not being able to do things I used to do Other people s perceptions Physical limitations Loneliness/feeling left out/ignored 19% 8% 6% 4% 4% 3% 3% 3% 3% the Oldest Boomers. The Youngest Boomers value their homes at approximately $304,400. The Oldest Boomers value their homes at approximately $269,300. Large majorities of both the Youngest Boomers (70%) and Oldest Boomers (75%) plan to remain in their current homes. Less than one in five of both the Youngest Boomers (17%) and the Oldest Boomers (17%) plan on moving within the next five years. Finances Life insurance, health insurance, and highly liquid assets such as certificates of deposit and savings accounts are the bedrock financial products owned by both the Youngest and Oldest Boomers, complemented by 401(k)/403(b) for a much higher percentage of the Youngest Boomers (see Figure 14). Both groups own a similar number of financial products, but ownership on some specific products differs. Reflecting longstanding trends in employee benefits and pension coverage, more of the Youngest Boomers than the Oldest Boomers own a 401(k) plan (71% versus 54%) and disability insurance (57% versus 37%), while more of the Oldest Boomers have a traditional defined benefit pension (49% versus 37%), or an annuity (37% versus 17%). Understandably, since more of the Oldest Boomers are out of the workforce, fewer would have a 401(k) plan, and with the transition from defined benefit pensions to defined contribution plans, it would explain why more Oldest Boomers still have this type of plan. Interestingly, as many Youngest Boomers (27%) say they own long-term care insurance as Oldest Boomers (25%), it is unlikely that this is the case. While only 19% of the Oldest Boomers indicated they would consider using a reverse mortgage during their retirement (or have already during their first year of eligibility), just about a quarter (24%) of the Youngest Boomers would consider using one. 18

19 Figure 14: Financial Product Ownership* Life insurance Health insurance CD/savings account 401(k)/403(b)/retirement plan Disability insurance IRA Stocks Defined benefit pension plan Mutual funds Long-term care insurance Bonds Annuity SEP or money purchase plan 88% 81% 82% 76% 77% 76% 71% 54% 57% 37% 45% 51% 40% 40% 37% 49% 34% 38% 27% 25% 24% 27% 17% 37% 1% 3% Youngest Boomers Oldest Boomers *Asked of both re-contacted and new respondents. From current or former employer. On average, the Youngest Boomers surveyed earn $89,100 in household income annually compared to the Oldest Boomers who earn $71,300 annually, which is understandable in view of the larger proportion of the Oldest Boomers who are retired or on disability income, and the lower percentage who are employed full-time. The Oldest Boomers estimate their household net worth excluding home value to be, on average, $236,700 compared to the Youngest Boomers who estimate their household net worth to be, on average, $206,600. Boomer Bookends: Insights Into the Oldest and Youngest Boomers 19

20 The Youngest Boomers: Today & How They Compare to the Oldest Boomers One in five (19%) of the Oldest Boomers has already received an inheritance, while only 10% of the Youngest Boomers have received one. Since more of the Oldest Boomers have lost one or both parents, it is understandable why more would have received an inheritance. However, for those who haven t already received an inheritance and have at least one parent alive, an equal percentage of Youngest Boomers and Oldest Boomers still expect to receive one (see Figure 15). Of the 32% of Oldest Boomers who have not received an inheritance already and have at least one parent still alive, 27% still expect to receive one, on average $185,800. On the other hand, of the 84% of the Youngest Boomers who have not received an inheritance already and have at least one parent still alive, 28% still expect to receive one, on average $207,800. Almost six in ten (57%) of the Oldest Boomers say they provided financial assistance to their children or grandchildren in the last five years, averaging $59,000 in assistance in that period. Only 18% of Youngest Boomers say they have received financial assistance from their parents, averaging $61,100. However, both the Youngest Boomers (78%) and Oldest Boomers (80%) reported that the amount of the assistance provided or received was less than $50,000. Figure 15: Inheritance from Parents Do you expect to receive an inheritance from your parents?* Approximately, what do you expect the value of the inheritance to be before taxes? Youngest Boomers Oldest Boomers 4% 1% 68% 72% 28% 27% Yes No Don t know Less than $50,000 $50,000- $99,999 $100,000- $249,999 $250,000- $499,99 $500,000 or more Don t know/ refused 18% 26% 19% 16% 17% 9% 10% 14% 13% 8% 23% 28% Youngest Boomers Oldest Boomers Mean: $207.8 Mean: $185.8 *Asked of those who have not already received an inheritance and have a least one parent still living. Asked of those who indicated that they expect to receive an inheritance from parents. 20

21 Both the Youngest Boomers (74%) and Oldest Boomers (65%) reported that they would prefer a financial arrangement that guarantees a source of lifetime income but may limit spending in early retirement, as opposed to spending more in early retirement that may limit spending in later retirement. Interestingly, a small percentage of respondents in either group currently own an annuity product, which would provide this type of financial payout, although almost four in four (37%) of the Oldest Boomers report owning ten, a much higher percentage than the Youngest Boomers (17%). It may be that the Youngest Boomers, with much more child-rearing responsibility and accompanying financial impact do not yet have the resources to provide this type of guaranteed income security for themselves. There is an even split between those who seek advice from a professional financial advisor versus those who did not among the Youngest and Oldest Boomers. Only 45% of both the Youngest Boomers and Oldest Boomers have sought advice from a financial advisor. Surprisingly, the top mention among the Youngest Boomers for not seeking professional advice is not being able to afford one. While some financial advisors charge a fee, many are paid only through commission on sales, indicating that many Boomers may not be taking advantage of all the types of professional financial advice available to them. Not surprisingly, compared to the Youngest Boomers, more of the Oldest Boomers (13% versus 2% of Youngest Boomers) have already achieved their retirement savings goals. However, in both groups the majority are behind in their savings goals or have not set goals (see Figure 16). When asked to indicate what percentage of retirement income will come from Social Security, Figure 16: Perceptions of Progress Toward Retirement Savings Goals Already achieved goals On track for reaching goals Somewhat behind Significantly behind Have not started Do not have goals 2% 13% 34% 25% 35% 29% 18% 15% 4% 2% 7% 15% Youngest Boomers Oldest Boomers Boomer Bookends: Insights Into the Oldest and Youngest Boomers 21

22 The Youngest Boomers: Today & How They Compare to the Oldest Boomers Figure 17: Projected Sources of Retirement Income Youngest Boomers Savings & Investments 27% 33% Social Security 401(k)/ Pension 41% 401(k)/pension plans, and savings and investments, the Youngest Boomers said that the majority of their retirement income will come from their 401(k)/pension plans (41%), followed by Social Security (33%), and then their savings/ investments (27%). See Figure 17. Respondents with lower income projected a greater percentage of retirement income to come from Social Security than respondents with higher income. Nearly a quarter (22%) of the Youngest Boomers who earn $100K to just under $200K a year anticipate over 40% of their retirement income will come from Social Security compared to 29% of respondents who earn $50K to just under $100K a year and 47% who earn $25K to just under $50K. In fact, 12% of those earning $25K to just under $50K anticipate that 81% 100% of their retirement income will come from Social Security. Almost six in ten (58%) of those earning $100K to just under $200K a year anticipate that over 40% of their retirement income will come from 401(k) or pension compared to those who earn $50K to just under $100K a year (46%) and those who earn $25K to just under $50K a year (46%). One in five (21%) respondents who earn $25K to just under $50K a year project none of their income will come from 401(k) or pension. There is more agreement regarding projected income from savings and investments among these three income groups. About one in five of those earning $25K to just under $50K (17%), those earning $50K to just under $100K (23%), and those earning $100K to just under $200K (22%) project over 40% of their retirement income will come from savings and investments. 22

23 Summary and Implications There have been and continue to be tremendous resources expended to understand the Baby Boomers because of the sheer size of this cohort and their historical and ongoing impact on the culture, economics, and social challenges over the last half century. The results of this study confirm the complexity of trying to characterize a large and diverse group based simply on basic demographic attributes. Demographically, those born in 1946 and 1964 are both identified as Baby Boomers by virtue of their birth cohort. Yet, the Youngest Boomers clearly have much less of a cohort identity with the Oldest Boomers than with the Generation X cohort following them. Despite this, almost equal percentages describe the worst thing about their respective ages despite an 18-year difference as old age or getting older. In general, they are very similar on most demographic variables such as education, and comparable in annual income given their respective employment circumstances. Caregiving for an older relative is also an area where equivalent portions of these age groups share common ground, with 17% of the Youngest and 14% of the Oldest Boomers respectively providing such care. The Youngest Boomers are more heavily focused on their children, with a large majority still having children at home, while the Oldest Boomers are more likely to have grandchildren and much less likely to have a living parent. There are also commonalities in their perceptions regarding the reasons for their anticipated life expectancy, primarily their own health status and the life expectancy of their parents. Both the Youngest and Oldest Boomers are looking to take advantage of different financial resources in the future, yet both groups also may be underestimating the importance of Social Security retirement benefits in their retirement income mix. Historically, the majority of retired Americans rely on Social Security benefits for close to two-thirds or more of their retirement income, supplemented by pension benefits, 401(k), and personal savings and investment income. Yet, these groups generally expect Social Security to provide only about one-third of their retirement income. Those with the lowest annual income under $50K are more accurately expecting Social Security benefits to account for 80% 100% of their retirement income. Despite popular perception that Boomers are generally skeptical about the future viability of Social Security as a foundation of their retirement income, a large majority of both are clearly anticipating these benefits to account for significant portions of their future retirement income security. More of the Oldest Boomers have also invested in additional discretionary forms of guaranteed income through annuities, but equal percentages of both groups invest in long-term care insurance as another income security hedge. These may be among the reasons that more of the Oldest Boomers feel that they have done a good job of ensuring a steady stream of income for their retirement, and saving and investing for their future thus far in comparison to the Youngest Boomers. Boomer Bookends: Insights Into the Oldest and Youngest Boomers 23

24 Summary and Implications In view of the economic downturn beginning in 2008 and its significant negative impact on the value of equity-based retirement income such as 401(k) defined contribution plans, the value of guaranteed income benefit programs, and products such as defined benefit pensions, Social Security, and annuities should well elicit more attention and consideration. Both the Youngest and Oldest Boomers clearly share the bedrock of their financial security through financial products and benefits such as life insurance, employer-provided health benefits, personal savings, 401(k), IRAs, and disability insurance. Even so, only 38% of the Oldest Boomers feel they have achieved or are on track to achieve their retirement savings goals, and an equivalent 36% of the Youngest Boomers feel the same way. An interesting divergence occurs here between the Youngest and Oldest Boomers. The Young- est Boomers concur with almost equal percentages that they are concerned about all the major issues about retirement such as outliving their resources, having to work longer to live comfortably, and affording health care. While also sharing these concerns, the largest percentage of the Oldest Boomers (24%) reveal that they have no major concerns about retirement. Health issues clearly emerge as a differentiator between the Oldest and Youngest Boomers. Even though there was relative stability in selfreported health status among the Oldest Boomers re-contacted in 2008, health changes have an impact on Oldest Boomers employment, with almost one in five already out of the workforce due to disability, and a lower percentage who report excellent to good health in comparison to the Youngest Boomers _MetLife.indd 24 2/23/09 2:36:47 PM

25 Methodology The Boomer Bookends study was conducted by GfK Custom Research North America on behalf of the MetLife Mature Market Institute (MMI) during October 2008, as a follow-up to Boomers: Ready to Launch, released in The 2007 study consisted of a telephone survey of 1,000 participants aged 61 in 2007, who were asked to be re-contacted for the follow-up survey. For those re-contacted, responses from a select number of questions from the 2007 survey were compared with their responses in the 2008 survey. A total of 1,072 respondents born in 1946 (the Oldest Boomers) were surveyed by telephone for the 2008 study, which included 562 of the 910 respondents from the 2007 study who agreed to be re-contacted. The re-contacted group was supplemented with an additional 510 new respondents provided by Dunhill. A total of 1,000 respondents born in 1964 (the Youngest Boomers) were also surveyed by telephone. Data were weighted by demographics to reflect the total population. The margin of error for the survey was +/- 3 percentage points. Boomer Bookends: Insights Into the Oldest and Youngest Boomers 25

26 Appendix Figure 18: Demographics Youngest Boomers Oldest Boomers Marital Status Married 76% 67% Single, never married 17% 9% Domestic partnership 0% 0% Divorced 5% 16% Separated 1% 0% Widowed 1% 7% Ethnic Background White/Caucasian 79% 84% Black/African-American 13% 9% Asian/Other 8% 7% Hispanic Origin Yes 10% 7% No 90% 93% Gender Male 49% 47% Female 51% 53% Employment Status Employed (net) 80% 53% Employed full-time 69% 50% Employed part-time 11% 3% Stay at home Mom/Dad 7% 2% Self-employed 6% 4% On Disability 4% 11% Looking for work 2% 2% Fully retired 0% 19% Education Did not complete high school 2% 4% High school or GED 39% 38% Associate s degree 19% 20% Bachelor s degree 26% 25% Master s or doctorate degree 13% 13% 26

27 Youngest Boomers Oldest Boomers Household Net Worth (excluding home value) Less than $50,000 20% 19% $50,000-$99,999 17% 13% $100,000-$249,999 25% 20% $250,000-$499,999 19% 15% $500,000 or more 9% 16% Don t know 5% 10% Refused 5% 8% Youngest Boomers Oldest Boomers Income Less than $25,000 5% 14% $25,000-$49,999 16% 23% $50,000-$99,999 49% 45% $100,000-$199,999 25% 15% $200,000 or more 5% 4% Youngest Boomers Oldest Boomers Estimated Population 2008* 4,575,312 2,690,506 Numbers may not add to 100% due to rounding. *As of July 1, Source: U.S. Census Bureau, National Population Estimates, Boomer Bookends: Insights Into the Oldest and Youngest Boomers 27

28 Notes 28

29 Notes Boomer Bookends: Insights Into the Oldest and Youngest Boomers 29