RISMEDIA, August 11, 2010—(MCT)—Are Internet connections and annual family vacations a need or want? What about your pet? For many baby boomers, those are all basic needs, not luxuries, according to a new survey.
Eighty-four percent of those surveyed said having an Internet connection is a basic need, and 66% feel the same about shopping for birthdays and special occasions. Fifty-one percent said pet care is a basic need, and 50% said taking a family vacation once a year is a need, not a luxury, according to a recent survey by MainStay Investments that polled 1,049 consumers aged 45-65.
As baby boomers reach retirement age, they are redefining what constitutes a luxury item and what defines a basic need, but being able to afford those basic needs may affect the way some boomers prepare for retirement.
“We’ve seen that boomers really want to have it all,” said Matt Leung, director and head of practice management programs at MainStay Investments.
Traditionally, basic needs extended to three categories: food, clothing and shelter. But that’s changing.
According to the survey, boomers find the following items to be basic needs:
-Weekend getaways: 46%
-Professional hair color/cut: 43%
-Children, grandchildren’s education: 42%
-Dining out: 38%
-Domestic travel: 35%
-Ordering takeout: 34%
Many boomers said they’re willing to alter the way they save for retirement—or even work a few more years—in order to maintain their pre-retirement lifestyle, the study found.
About three in four respondents said they would rather spend less now so they can invest in a more comfortable retirement, and 47% said they would downsize their home in retirement to be able to afford their lifestyle expenses.
But what survey participants say on a survey may differ from what they end up doing, said Dr. David Stewart, a financial psychologist who focuses on consumer behavior, and dean of the school of business administration at the University of California at Riverside.
“The socially desirable response, the seemingly responsible response, is ‘Yes, I do need to save for retirement more,’ but the reality is the baby boomer generation as a whole has not adequately saved for retirement,” Stewart said.
Retired lawyer Steve Lawton, 67, said he didn’t consider planning for retirement until later in life. As an attorney in the Washington area, he made mortgage payments and put two daughters through private schools and college, not giving much thought to his retirement fund.
“The money issue was real simple: A whole lot came in and a whole lot came out, and retirement was kind of secondary,” Lawton said. “It’s really easy when you’re raising a family, particularly in a big city—it’s easy to spend a lot of money.”
Lawton said he was in his late 50s when he finally went to a financial adviser to make plans for retirement. He now does pro bono work for the American Academy of Pediatrics and uses his retirement to travel, play tennis and go fly-fishing.
Lawton said he does not consider his Internet connection or pet care to be luxuries. “I’ve always had pets,” Lawton said. “My major luxury right now is time.”
In order to afford the lifestyle of their choosing, many baby boomers said they’ll push back retirement, according to the survey. Some boomers may work until past their 70th birthday, Stewart said.
Others may save more, adjust portfolio allocations and seek help from a financial adviser to ensure they can maintain their previous lifestyle after they retire.
Traditionally, people approaching retirement have been net savers, as compared with younger generations, who are net consumers, Stewart said.
But as baby boomers reached middle age, there was not much of a shift in spending behavior. Rather, boomers stayed in the net consumer phase rather than moving to the saver phase, he said.
Now, as more boomers approach retirement in the midst of an economic downturn, that shift toward becoming a saver may be near, Stewart said.
Boomers nearing retirement may realize, “Maybe I can’t live in as much excess as I have been,” Leung said.
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