The State of Retirement: Denial No More? MacroMonitor Marketing Report Vol. VIII, No. 2 May 2007

Data from the recently released 2006-07 MacroMonitor reveal that the overall incidence of households with one or more retirement accounts is significantly higher than in the past. More than three in every five households (61.8%) now have at least one type of retirement account, compared to fewer than half (48.3%) a decade ago. Households appear finally to have reacted in response to:

  • News and magazine articles' increased attention in the past several years to the lack of retirement savings in the United States
  • The recent and recurring debate about changes to and the potential insolvency of Social Security
  • The incessant advertising by financial institutions related to the need for retirement planning
  • The constant deluge of seminars, books, and talking heads that focuses on the challenge of retirement.

But the most important reason why retirement-account incidences (and amounts) have increased recently may be that the Boomers have seen or are seeing the needs and difficulties experienced by their aging parents and are no longer in denial about their own mortality and their need to prepare for their own remaining years.

Figure 1: Trends in Retirement Account Ownership

This Marketing Report highlights the upward trend not only in the percentage of U.S. households owning a retirement account but also in the balances in these accounts. For Boomers, in particular, their increasing incidences of and amounts in retirement accounts seem to suggest that they have passed the tipping point on the need to prepare for retirement.

Despite these positive trends, the report delves into the two potential obstacles to Boomers' ability to accumulate resources for retirement. The first involves the increased likelihood of caring for aging dependent adults. The second involves the increased likelihood that the household will have either children who have returned home after a period away ("Boomerang Children") or adult children who are still living at home (we refer to the stage as Extended Adolescents). Concern about having insufficient resources to fund the retirement years bring to the fore the concept of a redesigned, more flexible reverse-mortgage product that would make it easier for upcoming Boomer retirees to tap into home equity to help fund their retirement.