Boomers and Gen Xers, beware: Retirement isn’t likely to go as well for you as it has for those currently retired.

That’s the word from a new study from the Insured Retirement Institute, “It’s All About Income,” which found that current retirees, especially those who had more than a “token amount” of investable assets at the time of their retirement, are actually doing pretty well, all things considered. However, that doesn’t look likely to continue for their successors, particularly boomers and Gen Xers, because of the changing circumstances surrounding retirement.

The positive attitudes and relative comfort of current retirees’ situations, now that they’re out of the workplace, “are anchored in a rapidly disappearing aspect of the American retirement experience: the defined benefit pension,” the study said.

While nearly all of the study participants “have current household income of $50,000 or more, compared to the national median family income for persons aged 65 and older of $43,000,” pensions provided at least half of total income for more than 40 percent of the participants.

To get that kind of pension income out of a life-only annuity, it added, a retiree would have to invest as much as $485,000. And to drive home the difference even further, it pointed out that currently only 24 percent of workers in private industry have a defined benefit pension plan.

Approximately 30 percent of retirees are getting income from an annuity, with two thirds of them receiving life or life-contingent payments, and more than 70 percent of retirees receiving annuity income are very or somewhat satisfied with it — more than any other investment type.

And despite being in the midst of a much brighter retirement picture than not-yet-retired boomers and GenXers, those retirees didn’t do a whole lot more planning or estimating than current workers do in anticipation of retirement.

The majority didn’t downsize, many retired earlier than 65 — thus cutting their Social Security benefits — and didn’t do a huge amount of planning around potential medical expenses.

(Most — 60 percent — still believe erroneously that Medicare will cover long-term care, for instance.) Interestingly, those with higher asset levels have better health, both at the point of and during retirement. Of course, older retirees are also more likely to have retiree health care benefits — something else that’s disappearing.

But what they do have is a pension. And 60 percent of current retirees would not have had, at the time of their retirement, the money to buy an annuity that could produce their current level of income. Without the pension, they would have had a substantially lower standard of living, the study found.

Instant Insights /

DB pensions responsible for current retirees' financial condition

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