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Baby Boomers Envision Their Retirement: An AARP Segmentation Analysis --
Executive Summary Part I

Table of Contents

Introduction and Background

The Baby Boom generation-the cohort of Americans born between 1946 and 1964-has long commanded the attention of demographers, politicians, marketers, and social scientists. Seventy-six million strong, Baby Boomers represent the largest single sustained growth of the population in the history of the United States. Their mass alone has had an enormous impact on the national psyche, political arena and social fabric. From the youth culture they created in the 1960s and 1970s to the dual-income households of the 1980s and 1990s, this generation has reinterpreted each successive stage of life. As the oldest of the Baby Boomers, now 52, approach later adulthood, they are again poised to redefine the next stage, retirement.

There is little doubt that the impact of the Baby Boom's generation has never been underestimated. The cohesiveness of this cohort, however, has perhaps been grossly overestimated. Although commonly viewed as a monolith, the idea of the Baby Boomers as a homogeneous group is more myth than reality. With its members spanning nearly 20 years of life, Baby Boomers are represented by a wide range of life stages, life experiences, and life values. The temptation to generalize about this generation is likely driven by a compelling need to understand how this huge segment of society will shape the future. Yet, one of the key characteristics of the Baby Boom cohort is its diversity.

For policymakers and business leaders, the diversity of the Baby Boom generation presents major challenges as we prepare for a new millennium and a new type of retirement. This diversity will, in fact, become more pronounced as Baby Boomers move en masse into their fifties. To tap into the wide range of values, attitudes and behaviors that Baby Boomers will bring to their retirement in the new millennium, in 1998 AARP embarked upon a major research initiative with Roper Starch Worldwide Inc. AARP undertook this research with the goal of understanding this generation in all its complexity. The result is a definitive and comprehensive portrait of this massive group as it prepares to enter later adulthood. Baby Boomers Envision Their Retirement: An AARP Segmentation Analysis underscores the heterogeneity of today's 33-to-52 year-olds as it relates to their retirement planning and preparation and their hopes and expectations of the future.

Segmenting the generation into five key attitudinal and behavioral groups, this research provides a road map to the retirement of the largest generation in the nation's history. From the Self Reliants and Enthusiasts, groups who are well-prepared for the retirement road ahead, to the Strugglers and the Anxious, those who are more pessimistic about the future, to Today's Traditionalists who expect a traditional retirement that also includes work, the following report provides keys to better understanding and communicating with the next generation of American retirees.


Overview Of The Research Design

The design of this project included five phases of research among Baby Boomers. Each phase in the project was intended to build upon and inform the subsequent phases. The centerpiece of the project was a segmentation analysis, aimed at developing a fuller understanding of the Baby Boom population. The five phases of research included:

  • an initial review of background data among Baby Boomers, drawn from the Roper Reports database and presented in a white paper entitled "A Profile of the Baby Boom: Retirement, Finances, Health Information, and Other Key Areas of Exploration";

  • a qualitative research phase, with a total of eight focus groups conducted among Baby Boomers in four cities (Kansas City, Providence, Charlotte, and Phoenix);

  • a large-scale quantitative survey, conducted by telephone in 30-minute interviews among a nationally representative sample of 2,001 adult Americans aged 33-52;

  • a segmentation analysis of the survey data, designed to better understand the Baby Boom population by grouping individuals based on their attitudes, beliefs and behaviors regarding retirement;

  • a second qualitative research phase, with a total of 8 post-survey focus groups conducted among Baby Boomers (among the segment types identified in the segmentation analysis), conducted in two cities (Chicago and Baltimore).

Key Findings From The Survey

Unique Expectations for Retirement

When I am 65, I think I'll still be working.  I don't like not to work. Hopefully, I'll still have the health to keep working. -- Male Baby BoomerBaby Boomers envision a very novel type of retirement. The survey finds that most Baby Boomers believe that they will still be working during their retirement years.

  • Fully eight in ten Baby Boomers say they plan to work at least part time during their retirement; just 16% say they will not work at all;

  • A little over a third (35%) say they will be working part-time mainly for the sake of interest and enjoyment;

  • About one quarter (23%) say they will work part-time mainly for the income it provides;

  • Others envision starting their own business (17%) or working full-time at a new job/career (5%).

In other ways, the data from the quantitative stage of this study suggest that Baby Boomers may experience a different type of retirement than the previous generation. For example,

  • Just two in ten Baby Boomers (21%) expect to move to a new geographic area when they retire;

  • Almost one quarter (23%) expect to receive an inheritance that will affect their retirement planning;

  • Only about one third (35%) expect that they will have to scale back their lifestyle during retirement;

  • Just 23% think they will have to struggle to make ends meet;

  • Relatively few believe, at least at this point, that they will have serious health problems when they are retired (16%).


Other Expectations in Retirement

The survey provides insight into other ways Baby Boomers expect to define their retirement years.

  • Close to half (49%) say they expect to devote more time to community service or volunteer activities during retirement.

  • More than seven in ten Baby Boomers (73%) say they expect to have a hobby or special interest that they will dedicate a lot of time to when they are retired.

  • Family, it seems, will play an important role in the Baby Boomer retirement: 57% expect to live near at least one of their children; seven in ten (70%) say they look forward to being a grandparent.

Focusing on Retirement and Reflecting Self-reliance

The best thing you can hope for at 85 is that you would not be a burden to your children. That you could be self-sufficient -- Male Baby BoomerChallenging the conventional wisdom which held that Baby Boomers are only concerned about the present, the study finds strong evidence that they have actually focused quite a lot on the prospect of retirement. A strong majority of Baby Boomers (72%) say that they have given a lot or at least some thought to their retirement years, while just over one quarter say they have given only a little thought or none at all to their retirement years. Baby Boomers' definition of their retirement seems to include a large measure of self-reliance. Their self-reliant attitude is reflected in that:

  • Fully seven in ten Baby Boomers say they don't want to depend on their children during retirement;

  • Six in ten feel confident in their ability to adequately prepare for the future;

  • Only about two in ten have the attitude that "the future will take care of itself";

  • Just 9% believe that people ought to be able to depend on their family financially during retirement.

This self-reliant attitude is reflected in Baby Boomers' anticipated sources of retirement income, as well. For example,

  • Almost seven in ten Baby Boomers (68%) say they can count on self-directed sources of income such as IRAs and 401(k)s during retirement;

  • Six in ten are counting on money from savings and investments as retirement income;

  • Fewer than half (48%) say they are counting on Social Security as a source of retirement income;

  • Two-thirds of Baby Boomers are satisfied with the amount of money they are putting away today for retirement.

It is worthy of note that the largest group to emerge from the segmentation analysis is characterized by self-reliance.


Generational Differences

I wonder if we're not doing the reverse of what our parents did...they spent the money when they were 60, 70. And we may be spending it when we're 30, 40, and 50, but I don't know that we're going to be as well off when we're ages of our parents. -- Female Baby BoomerIn many ways, the survey supports the stereotypes of Baby Boomers as a confident, independent, optimistic, and somewhat self-involved group. Moreover, Baby Boomers are conscious of the differences between their generation and previous ones. For example, compared to other generations, Baby Boomers admit that:

  • Their generation needs more money than their parents' generation to live comfortably (84%);

  • Their generation is more self-indulgent than their parents' (75%);

  • Their generation will live longer (67%);

  • Their generation will be healthier during retirement (56%).

Optimism and Ambivalence

The Baby Boomers' characteristic optimism is illustrated in their attitudes toward their retirement years. As they look toward the future,

  • Nearly seven in ten (69%) feel optimistic about their retirement years, with 28% saying they are very optimistic and very much looking forward to those years, and 41% saying they are fairly optimistic and pretty much looking forward to them.

  • Those who have thought the most about their retirement are actually the most optimistic about it; more than eight in ten (81%) of those who say they have given a great deal of thought to retirement say they feel optimistic about their later years.

In some ways, this generation thinks very optimistically as it looks toward getting older. At times, though, this optimism is tempered by anxiety about finances.

  • When asked to rate the extent to which various statements about retirement describe the meaning of retirement for themselves, Baby Boomers gave the highest ratings to positive (and somewhat traditional) statements, topped by time to spend time with family (74%) and time to pursue interests/hobbies (74%);

  • Meanwhile, the bottom four items on the list (all less-positive associations, things such as boredom and isolation) are viewed as being an element of retirement by fewer than two in ten Baby Boomers;

  • At the same time, though, when asked to name the first thing that comes to mind when they think of retirement, "having enough money/financial security" is the number one response in an open-ended question.

Indeed, when it comes to thinking about retirement, Baby Boomers' views of the subject reflect a certain amount of ambivalence. For example:

  • Three quarters (76%) of Baby Boomers say it is important to sacrifice and save now for the future, yet about one half (47%) say they find it hard to save;

  • About four in ten Baby Boomers (39%) agree with the sentiment "I can't imagine myself retired," yet almost the same proportion (44%) disagree;

  • Ambivalence about getting older underscores the fact that while the median age of the average Boomer is 42, the typical Boomer says he or she feels 35!


Polarization Within the Generation

The trend of polarization-a widening gap between the rich and poor-which has been observed in other recent Roper surveys, is evident in this survey among Baby Boomers. Approximately one-quarter of Baby Boomers are ill-prepared for and pessimistic about retirement. Indeed, income, optimism about retirement, and preparedness all divide the Baby Boomers when it comes to attitudes concerning their impending retirement years.

  • The "Haves," those at the high end of the household income scale with household incomes of $70K+ (25% of the total sample), are twice as likely as the "Have-nots," those at the low end with household incomes of less than $30K (18% of the sample), to be "very optimistic" about their retirement (36% vs. 18%);

  • The Haves are nearly twice as likely as the Have-nots to have given a great deal of thought to their retirement (49% versus 28%);

  • And the Haves are much more likely than the Have-nots to feel confident in their ability to prepare for the future (76% vs. 47%);

  • Although one in four Baby Boomers overall do not expect to be able to retire, that number jumps to 44% among the Have-nots.

Evaluating Social Security and Medicare

I expect to be alive and healthier than my parents. I didn't fall victim to some of the crutches that they did, the smoking and even the fatty foods...I hope it translates into a longer life. -- Male Baby BoomerIn exploring Baby Boomers' general attitudes toward Social Security and Medicare, the survey suggests that Baby Boomers have conflicted views of these programs. In evaluating Social Security:

  • More than half (55%) say they have a very/somewhat favorable view of Social Security;

  • A majority of Baby Boomers agree with the statement "you put money into the Social Security System and you expect to get it back" (55%);

  • Yet while almost half (48%) expect to count on Social Security during retirement, just 15% expect to rely on it for most or all of their retirement needs. (It should also be noted that Roper Reports surveys suggest that although Social Security is Baby Boomers' second most expected source of retirement income, expectations of Social Security as a source of retirement income have been declining over the past two decades);

  • Just over one-third (36%) feel personally confident that Social Security will be around when they retire.

When it comes to evaluating Medicare, Baby Boomers have similarly conflicted views.

  • Six in ten say they have a very or somewhat favorable view of the system. (These findings are consistent with Roper Reports findings showing that 74% of Baby Boomers have a highly or moderately favorable view of Medicare);

  • Yet fewer than half (46%) say they are very or somewhat knowledgeable about the system;

  • Only about four in ten (39%) feel confident Medicare will be available to them during retirement.

  • Currently, most Baby Boomers express confidence about various aspects of their current health care coverage.

  • While majorities say they are very satisfied with various aspects of their current health plan, far fewer say they feel confident about the same aspects when it comes to their impending retirement health care coverage: the ability to get the care you need (60% vs. 25%); the ability to visit the doctors of their own choosing (55% vs. 24%); the ability to see specialists when you feel you need it (53% vs. 21%).

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publication date: February 1999

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