More and more baby boomers are entering the retirement phase of their lives each year and sufficient income for retirement expenses is needed to sustain the lifestyle they worked hard to achieve. A lot has changed since they entered the workforce, including a person’s longevity. In 1940, the life expectancy of a 65-year-old was almost 14 years; today it is just over 20 years.Since the baby boom generation will spend more years in retirement than previous generations, they will have to save more money during their working years to be able to enjoy the same level of comfort throughout retirement as during their professional lives.
Housing leads the retirement expense list, costing retirees approximately 34 percent of their average annual spending.For retired baby boomers, one housing trend that has emerged is the senior rental market. Between 2009 and 2015, the number of renters over age 55 increased 28 percent.Many retirees want to “age in place” with the numerous convenience, lifestyle and activity options urban living offers.
With Americans living longer, there’s also the issue of access to affordable health care throughout retirement. The Lifetime Medical Spending of Retirees report stated households incur an average of $122,000 in medical expenses, including Medicaid payments, between the age of 70 and throughout their remaining years.
Life doesn’t stop after retirement, and part of an active lifestyle requires daily transportation needs. This can be a significant expense. Transportation expenses account for 15 percent of annual spending in retirement.
Transportation is a big expense because retirees who don’t drive need to spend money on alternative means of transportation, as supported by data in a report from Eldercare Locator, a public service supported by the U.S. Administration on Aging. According to the report,“21 percent of the organization’s calls come from individuals who need assistance with finding reliable transportation to visit their doctors, shopping for groceries, attending religious services and performing other tasks that enable them to live full lives in their communities."
We take a closer look at these top retirement trends and other notable baby boomer statistics in the infographic below.
With these various expenses expected throughout retirement, baby boomers looking for the assurance of reliable retirement income sources and long-term retirement products have several options to create a balanced portfolio, including Social Security benefits, pensions, 401(k)s , annuities and various other retirement products.
While retirement needs vary by the individual, benefits provided by many retirement products such as principal protection, tax-deferred growth and lifetime income can help provide the financial security and stability that is essential during retirement.
A retirement plan that includes reliable income sources can help ease fears about outliving income in retirement so boomers can continue to do what they have always done – get busy living.
Dig deeper into housing retirement trends as well as transportation and health care innovations in our retirement trends series.
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