According to a Legg Mason Investment Survey, US baby boomers — defined as ages 53 to 71 by Legg Mason —have on average $263,000 saved in defined contribution plans. But that figure is less than half of the $658,000 they say they will need to retire.
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Baby boomers are nowhere close to reaching their retirement goals
Baby boomers are falling short of their retirement savings goals, and it could be due to their conservative approach to investing.
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Legg Mason Executive VP & Head of Product and Business Development Thomas Hoops points out that baby boomers have taken a conservative investment approach with their assets accross the board.
"If they are applying a similar, conservative approach to how they invest their D.C. assets, they could be under allocated to the higher growth opportunities they will need to achieve their saving goals," Hoops wrote in the survey's release. "An overly conservative approach to D.C. investing can almost defeat the purpose of the plans’ benefits for investors who want to achieve their long-term goals."
Baby boomers keep 30% of their assets in cash, 24% in equities, 22% in fixed income investments, 4% in non-traditional investments, 8% in real estate investments, 2% in gold and precious metals, and 8% in other investments, according to Legg Mason.
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The survey also looks at the Gen-X age group and determined that, though they have more assets in non-traditional and real estate investments, they too could do well to invest more in higher-risk, higher-reward equities.
“Given the fact that people are living longer and are facing increasing health care costs and other rising economic pressures, the lesson here is vividly clear," wrote Hoops, "For those who want to achieve their financial goals in retirement, they need to save more and invest for more growth long before they receive their last paycheck.”
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