Saving for retirement: The financial reality of the golden years

America is getting older. In fact, 65 and older is the fastest growing age group in the country and approximately 10,000 Americans turn 65 every day. This rapid growth, made up primarily of Baby Boomers, means that the number of consumers at or nearing retirement is only getting bigger.

Unfortunately, however, many of these consumers are not ready. According to Mintel’s Baby Boomers and Finance report, over half of Baby Boomers are worried that they won’t have enough money to comfortably retire. This lack of adequate savings, in addition to a greater life expectancy, better overall health and higher education levels for men and women, is causing many consumers to delay retirement or continue to work part-time.

The vision of retirement as we once knew it is changing. It is no longer defined by golf courses or sitting at home painting landscapes. Many consumers today are adjusting their vision based on the financial reality that affording such a lifestyle is highly unlikely. And it’s not just Baby Boomers that have to make tough decisions. Millennials are also driving this new definition of retirement, as a new study by Merrill Edge found that 83% of Millennials plan to work in retirement. While some may continue working because they choose to, many are struggling to put any amount of savings away for retirement because of outstanding student loan burdens and other financial obligations.

Thinking Beyond Millennials

53% of Baby Boomers in the US own a tablet and 71% own a smartphone
One of the biggest misconceptions about Baby Boomers is their use of technology. However, they are very digitally connected. According to Mintel’s Marketing to Baby Boomers report, 53% of Baby Boomers in the US own a tablet and 71% own a smartphone. While most prefer online banking over mobile banking, the comfort with and use of technology is growing. So when it comes to digital wealth management and savings tools, marketers need to think beyond just Millennials.  

In November, Charles Schwab emailed prospects with the subject line, “Turn retirement savings into retirement income.” Not only did this email address the concerns that many older consumers face about outliving their retirement savings, but it offered an automated investment service that would help create “a steady, long-lasting income stream.” This email had a read rate of 25%, well above the industry’s benchmark read rate of 19% and higher than Schwab’s average read rate of 23%.

Innovations in FinTech are also addressing the growing level of concern around retirement. Student Loan Genius is a new company that is tackling the difficult trade-off that many consumers face when forced to choose between saving for retirement and paying down student loans. By working with employers, Student Loan Genius offers employees the opportunity to make a student loan payment, and still receive their employer’s matching contribution towards their 401k.    

The takeaway for financial marketers is that no matter what their age, consumers are worried about saving enough for retirement and they are looking for help to turn whatever their retirement vision might be into a reality.

Lily Harder is the Vice President of Research for Mintel Comperemedia. Lily specializes in the financial services industry, researching and presenting on the latest industry trends, competitive intelligence insights and newsworthy developments.