As the first members of the US baby boom generation start to turn 60 this year, millions of them will face a challenge even more daunting than rising health care costs and disappearing pensions: our research suggests that they will be forced to retire far sooner than they had hoped. Equally troubling, most baby boomers significantly underestimate the cost of retirement and hold unrealistic expectations about how they will finance it. Meanwhile, most financial-services firms have not stepped up to the challenge of helping this generation prepare for the golden years.
These are among the findings of a survey of more than 3,000 US retirees and preretirees, with a sampling that includes a broad representation of the approximately 76 million baby boomers now nearing retirement. Our research examined their retirement plans and concerns, as well as their patterns of interaction with financial-services firms over time. The respondents ranged from 40 to 75 years old and had investable assets of $1,000 to $2.5 million per household.1 When we compared the future plans of preretirees with the realities of people who have already retired, we found disconcerting gaps. Topping the list are significant miscalculations about future employment possibilities: while almost half...