Two tips to help baby boomers with their shifting retirement priorities
Does your role involve educating or motivating people to save for retirement? If so, you understand how important it is to show you’re in tune with what they’re going through, especially in challenging times such as these. We’ve got two suggestions for framing your conversations with retirement plan participants in ways that will reinforce your sensitivity and inspire their confidence.
Baby boomers’ top priorities include family and friends
We’ve written a lot about the fallout of the ongoing pandemic, including how it’s nudged retirement rates up and affected workers’ attempts to save for retirement.
Now it appears that the shifts in household social and financial situations we’ve seen over the past two-plus years may be shifting baby boomers’ retirement goals. Prior to the pandemic, maintaining financial stability and independence was the number one retirement nonnegotiable for those in and entering retirement. While these factors remain important, the ability to spend time with grandchildren and other family members has become the highest priority.
Living close to family (which didn’t make the previous top of the list) has also cracked the top five.
It’s as if, after COVID-19 made it impossible for many to hug their grandkids, boomers are committed to make up for lost time.
Baby boomers’ top five nonnegotiables for retirement
As of April 2021, includes retirees and preretirees born between 1946 and 1964
|1||Spend time with family and grandchildren|
|2||Maintain financial stability and independence|
|3||Maintain an active lifestyle|
|4||Be able to travel|
|5||Live close to family|
Source: “Center for a Secure Retirement Study: "Pandemic Forces Boomers to Financially Support Family, Greatly Impacting Their Own Retirement Plans,” Center for a Secure Retirement, CNO Financial Group, prnewswire.com, 7/22/21.
Tip #1: Make sure you understand boomer priorities
What does a shift in boomers’ retirement priorities mean to you? For one thing, it’s a reminder that retirement income planning is far more than just projected numbers on a spreadsheet.
As you enter planning conversations with retirees and preretirees, ask them what their retirement plans are today—even if you did so in 2019. Has family time become more important to them? That trip for two to India may have been replaced by a family trip to Disney World. And that hoped for, pied-à-terre in the city may now be a plan for a backyard pool.
Tip #2: Use positive messaging with your retirement guidance
When talking to your clients about their new priorities, you may need to give them a taste of reality or even break some bad news. While it’s responsible to share honest information with retirement savers about the risks they face, do so carefully, as an overly negative tone could lead them to take the opposite steps than you intended.
In a recent experiment,1 five groups of baby boomers were shown a brief passage from a Social Security trustee’s report warning of a potential funding shortfall in future years. For each group, the excerpt appeared under a different headline, ranging from neutral to alarming in tone.
The result? Boomers who read the more ominous headlines predicted they’d leave the workforce earlier than those who didn’t.
And the takeaway? Overly dramatic messages could lead to more harmful saving behavior.
Part of a retirement plan professional’s role is to provide participants with accurate and useful information about the factors that affect retirement readiness. When discussing potentially upsetting issues such as Social Security funding and market volatility, it’s important to be clear—but also use language and context that reinforce a productive, big picture focus.
To connect more effectively with boomers, check their priorities and mind your message
The guidance and encouragement you provide can be crucial to helping people achieve their retirement goals. Verifying where those goals stand today and staying appropriately positive with your messaging can be a huge help.
1 “How Does Media Coverage of Social Security Affect Worker Behavior?”, Center for Retirement Research at Boston College, October 2021.
The content of this document is for general information only and is believed to be accurate and reliable as of the posting date, but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made herein.
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