The Baby Boomers Prepare for Retirement

December 4, 2003

Abstract

Boston, MA, USA December 4, 2003

The population of pre-retirees and retirees is projected to increase by 30 million by 2020, and to account for about half of the US population, compared to 44 percent in 2002.

In the next few decades, the baby boomer generation—those born between 1946 and 1964—will retire. In the US, the baby boomers number seventy-six million and account for over 28 percent of the population. As they retire, their sheer numbers and wealth will have an enormous impact on the world’s rich countries. In a new report, , Celent examines the different facets of the baby boomer generation and the impact its retirement will have on the financial services industry.

The poverty rate among Americans over the age of 65 has plummeted, and those over 50 control four-fifths of the money invested in savings-and-loan associations and own two-thirds of all shares on the stock market. However, there are many for whom the future does not look rosy. With personal savings rates near all-time lows and slightly less than half of all workers participating in an employer-sponsored pension, and as defined benefit plans become increasingly rare, many retirees are unlikely to sustain their pre-retirement standard of living without retiring later or radically changing their savings and investment behavior. "US workers are rolling over billions of dollars of retirement plan assets and face critical decisions," says Adam Josephson, research associate in the securities and investments group at Celent and author of the report.

Despite the opportunity awaiting financial services firms, few have made any significant changes to accommodate those planning for their retirement. Such firms have introduced a raft of new products to sell

those nearing retirement, including enhanced annuities and target maturity funds. However, the needs of retirees extend far beyond such basic products. More appropriate steps on the part of financial services firms include equipping one’s sales force with the technology and expertise to help clients conduct comprehensive retirement planning. Firms that neglect to do so will make their clients’ lives unnecessarily difficult, and likely their own as well.

The report profiles the strategies of American Century, Colonial Bank, and Wachovia.

A Table of Contents is available online.

of Celent Communications' Retail Securities & Investments, Retail Banking and Life/Health Insurance research services can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

        

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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

Boston, MA, USA December 4, 2003

The Baby Boomers  Prepare for Retirement

Return to report Abstract

 

EXECUTIVE SUMMARY 3
INDUSTRY OVERVIEW 4
  Older, Wiser, Richer, and Healthier 6
  Who are the Baby Boomers? 7
  Are These Expectations Realistic? 9
  Benefits? What Benefits? 9
  Boomers are Delaying Retirement 12
  Will Boomers Inherit Much? 14
  How Much is Enough? 15
FINANCIAL INSTITUTIONS 16
  TIAA-CREF 16
  Providers of Retirement Products 17
  Race for Rollover Assets 20
  Beyond New Products 23
  Best for the Client? 25
  Change is Coming 26
  No Shortage of Technology 26
  American Century 27
  Colonial Bank 28
  Wachovia 30
CONCLUSION 32
OBJECTIVITY & METHODOLOGY 33

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