Baby Boomers Count Down to Retirement
Baby Boomers Count Down to Retirement
U.S. Treasury's Go Direct Campaign Launches Pledge Drive to Spur
Direct Deposit for Social Security Benefit Payments
Washington, D.C. – (Jan. 3, 2007) – As America's oldest baby boomers start counting down to retirement, a new government survey shows they are on the upswing in terms of financial savvy -- nearly twice as likely as today's seniors to bank and pay bills online. Yet despite their financial sophistication, one in four boomers still gets paid with old-fashioned paper checks, a trend that's particularly entrenched with those closest to retirement age (51-60 years old).
The national survey, sponsored by the U.S. Department of the Treasury and Federal Reserve Banks on behalf of the Go Direct campaign, coincides with a yearlong "Countdown to Retirement" pledge drive to encourage baby boomers preparing to head into retirement to choose direct deposit once they start collecting Social Security benefits.
"Direct deposit is a long-standing priority for Treasury, because it's safer and easier for consumers than paper checks," said Treasury Fiscal Assistant Secretary Donald Hammond. "With the anticipated surge in baby boomer retirements in the coming years, we must encourage Social Security recipients to sign up for direct deposit. There are significant benefits, in terms of safety and security, for the recipients and considerable cost savings for American taxpayers," Hammond said.
Boomers gearing up for retirement urged to use direct deposit
One year from now, the oldest of America's 77 million baby boomers – born between 1946 and 1964 – will turn 62, becoming eligible for Social Security retirement benefits. Go Direct, a national campaign aimed at increasing direct deposit use among existing Social Security recipients, works with national and local partners across the country to convert check payments to direct deposit.
"AARP strongly recommends direct deposit for Social Security benefits, and encourages people who are retiring to sign up for it," said John Rother, Group Executive Director of Policy and Strategy at AARP. "We stand behind choices and solutions that provide security, protection and empowerment for our members. Direct deposit makes good sense any way you look at it."
Boomers self-assured heading into retirement
The poll showed that in many ways, boomers are confident going into their retirement.
- While current indicators show the national savings rate is declining, the poll showed that only 16 percent of baby boomers say all or most of their future retirement income will come from Social Security. In comparison, twice as many (31 percent) existing retirees say Social Security makes up all or most of their income.
- Boomers also say they are more likely to wait to collect their Social Security retirement benefits. About one in seven (16 percent) boomers who are not yet retired plans to start collecting Social Security at age 62, compared to a third (34 percent) of current retirees who started collecting benefits at that age.
- Seventy percent of boomers who are not yet retired plan to pay greater attention to controlling their personal finances when they do retire, compared with 64 percent of today's retirees.
Mixed results for financial know-how
The poll also showed that nearly half (47 percent) of all boomers who have bank accounts use online banking, virtually the same as younger respondents (48 percent) and nearly double the number of people age 61 or older (24 percent).
However, a major exception is direct deposit, where boomers significantly lag older respondents. Twenty-five percent of boomers say they receive their wages, salary or other regular payments by paper checks, compared with just 13 percent of respondents age 61 or older. In addition, 40 percent of baby boomers who are unlikely to start using direct deposit in the next year say they don't trust or like direct deposit for a variety of reasons.
Yet even within the baby boomer population, there are disparities. The survey found that while nearly all boomers say they have a checking or savings account (94 percent), older boomers (ages 51-60) lag younger ones (ages 42-50) in moving into the electronic age. Older boomers fall behind younger baby boomers in use of online banking (36 percent to 56 percent). In addition, older boomers are less likely to enroll in direct deposit within the next year, compared to boomers overall (18 percent to 30 percent).
To help people currently receiving Social Security and other federal benefits sign up for direct deposit of their federal benefits, Go Direct offers a toll-free number, (800) 333-1795 and a Web site, www.GoDirect.org (English) and www.GoDirect.org/espanol/ (Spanish).
Baby boomers who are interested in taking the Countdown to Retirement pledge and learning how their attitudes about retirement compare with the national average can visit the Go Direct Web site and click on Countdown to Retirement.
These results are of a nationally representative telephone survey of 1,003 adults, age 18 and over, conducted October 23-November 12, 2006, by KRC Research. The margin of error for the overall study is +/-- 3.1 percent at the 95 percent confidence level.