Baby boomers face retirement crisis—little savings, high health costs

We are underestimating how much we are going to spend. The average amount spent by Americans 65-74 is $55,000 a year, but most baby boomers don’t think they will need anywhere near that amount. Indeed, 60% say they will need less than that to live on.

A lot of people are kidding themselves:

Expected annual retirement income need

  • Less than $35,000 — 44%
  • $35,000-$55,000 — 26%
  • $55,000-$75,000 — 16%
  • More than $75,000 — 14%

Source: Insured Retirement Institute

What’s the backup plan? What happens when a lot of people realize they haven’t thought this whole retirement thing through very well? Here’s the plan: Downsize, go back to work, or hit up the kids.

What will you do if you run out of money?

  • Downsize, live on Social Security alone — 58%
  • Return to work — 37%
  • Ask children for assistance — 6%

Source: Insured Retirement Institute

The part about returning to work, or staying at work, is already happening. One-third of employed boomers ages 67 to 72 have postponed retirement, the study says.

Do they have any regrets? Plenty. Among those not confident they did a good job preparing for retirement, the top two things they wish they had done differently were to have saved more (63%) and to have started saving earlier (58%).

Let’s hope Gen X, millennials and Gen Z will do a better job planning for retirement than baby boomers have done.

WATCH: Aging in place

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