I saw an interesting interview on Bloomberg Surveillance this morning that is worth watching and have included a link below. Tom Keene interviewed Andrew Sieg, head of Global Wealth & Retirement Solutions at Bank of America, about a recent study on near-retirees and retirees.
A quick summary of some of the points:
- Tom Keene believes politicians have created an uncertain future for people nearing retirement. Conversations seem to be dominated by this fear.
- Healthcare costs are the big “wildcard” of retirement expenses. Retirees on average spend about $20,000 per year on health care costs per year. Baby Boomers worry about healthcare costs more than any previous generation. Sieg said that it is critically important that people purchase long-term insurance at as young age as possible. People’s biggest concern is that they want peace of mind during retirement and long-term insurance will help.
- Sieg said Boomers are radically changing retirement. Seventy percent plan to work in retirement with about a half doing so by choice. The optimistic side of this is that many are choosing to use the “longevity bonus” as an opportunity to use their new freedom to pursue careers that they didn’t have time for when they were younger. Many see it as an opportunity to reinvent themselves.
- Current low interest rates are punitive for retirees.
- Both Keene and Sieg are concerned that proposals are being circulated around Washington that reduce the incentive to save. Most people need to increase their saving rate.
Bloomberg TV Video. “BofA’s Sieg on Retirement Planning” Video