Stuck in the Middle

Middle boomers also said they expect to receive 42 percent of their income from Social Security, which seems overly optimistic given that about 60 percent of retirees 65 and older depend on Social Security for most of their income. In addition, they expect to receive 37 percent of their income from either a traditional pension, a retirement savings plan such as a 401(k) plan, or a combination.

The survey found that 46 percent have a traditional pension that pays benefits for a lifetime, while another 23 percent had an annuity, which in some versions also provides steady lifetime income.

Savings under $80,000

But those who are planning to rely on their retirement savings may find themselves outliving them or drawing them down in small amounts. Half of all families headed by a middle boomer have retirement accounts under $80,000, according to the Employee Benefits Research Institute.

That’s much less than the $240,000 that Fidelity Investments estimates a 65-year-old couple retiring in 2009 would need in order to cover medical expenses, even with Medicare insurance coverage.

The most frightening statistic in the MetLife survey? That would be the 4 percent ages 52 to 58 who say they haven’t started saving yet for their retirement goals. Let’s hope it’s because they have a very good traditional pension and good retiree health insurance, which is even rarer.

The survey noted that neither the recent stock market downturn nor concerns about future health care costs seemed to have shaken the middle boomers’ desire to retire at the traditional age of 65. “It does call into question whether they will truly be adequately prepared financially over their expected longevity,” the report notes.

It comes as no surprise that the marketing institute said that the middle boomers need “to consider financial products that provide secure sources for a steady stream of income over their lifetimes, especially while they are young enough and have adequate time to take advantage of such resources.”

The report also notes another advantage: About a third of the middle boomers surveyed said they expect to receive an inheritance averaging about $181,000, from their parents, and another 21 percent have already receive an inheritance averaging about $120,000.

Thank you, frugal older generation.

Martha M. Hamilton writes a regular column for Bulletin Today on retirement and financial issues.