How Older Adults Are Changing America

Last year, Americans held about $18 trillion in IRAs and 401(k) retirement accounts — more than triple the figure from 2005 — according to the Investment Company Institute. Households headed by people ages 65 to 74 held a median of $164,000 in retirement accounts in 2019, up from $60,000 (in inflation-adjusted dollars) in 1998, says the Federal Reserve. 

No wonder that America’s banks, investment firms and insurers are increasingly rolling out new goods and services tailored to boomers — designed to help them create a secure retirement by using the money they’ve amassed and protecting that wealth against theft and abuse.

“There are thousands of Americans retiring every day, and the financial services industry is taking steps to serve them,” says Scott Smith, director at research firm Cerulli Associates. One ­example of how money managers are tailoring their offerings to boomers is T. Rowe Price’s recent purchase of Retiree Inc., whose retirement income planning software and strategies are highly regarded in the industry.

Companies are developing more products designed especially for older customers. For example, because the prospect of guaranteed monthly income beyond a Social Security benefit is appealing to many retirees, product providers have been rolling out updated ­annuities, Smith says. Financial giant Fidelity will roll out its new Guaranteed Income Direct offering this year, allowing 401(k) plan participants to convert a portion of their savings into an immediate income annuity once they hit retirement. 

Another example is Citi’s partnership, announced last September, with Covr Financial Technologies, which creates one easy-to-use online marketplace to navigate different areas of coverage, such as life insurance and long-term care. 

The nature of financial advice is changing, too, with greater attention being paid to methodologies for drawing down wealth and making money last through retirement. One example of the ongoing research in this area is a June report from money manager BlackRock and the Bipartisan Policy Center, which argues that a strategy of buying an annuity and investing more aggressively in the market — along with delaying one’s claim for Social Security benefits — will increase retirement security. 

That’s a top priority for most older Americans: “Of 23 million households ages 60 to 69, 16 million have less than $250,000 in ­financial assets,” Smith says. “For these folks, most of their income likely will be ­Social Security — and hopefully a little ­wiggle room.”

The unpleasant truth, however, is that for many older Americans, there is not a lot of wiggle room in their budgets. Roughly 1 out of every 5 Americans 65 and older rely on Social Security for more than three-quarters of their income, according to the latest estimates from the Social Security Administration. Fourteen percent of older Americans rely on Social Security for more than 90 percent of their income, and 11 percent are living near or below the poverty line.

To help protect older Americans at all income levels, government agencies and financial regulators have initiated or strengthened efforts to stem their financial exploitation. 

In 2021, for example, the Consumer ­Financial Protection Bureau and the Federal Deposit Insurance Corp. issued an update of their anti-fraud educational program called “Money Smart for Older Adults.” A new rule from Wall Street’s Financial Industry Regulatory Authority (FINRA) pushes brokers to have clients name “trusted contact persons.”

Listing a person to call if a broker has concerns about a client’s well-being is intended to help reduce elder abuse and fraud, which claimed 88,000 victims and cost $3.1 billion in 2022 alone. This adds to other safeguards, such as FINRA’s Rule 2165 on financial exploitation, which allows a hold to be placed on accounts suspected to be vulnerable to theft, such as those of customers 65 and older.

— Chris Taylor