Boomers say Internet, travel, pet care are basic needs

By Catherine Carlock, MarketWatch, 6 August 2010

SAN FRANCISCO (MarketWatch) -- Do you need or just want your Internet connection and an annual family vacation? 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% said shopping for birthdays and special occasions is. 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 of 1,049 consumers aged 45 to 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.

Traditionally, basic needs extended to three categories: food, clothing and shelter. But that's changing. Here's more information on the portion of boomers surveyed who 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%
• Movies, 30%

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.

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 help 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. "If boomers really want to live the retirement they've envisioned, then they need to do something about it."

http://www.marketwatch.com/story/boomers-say-travel-pet-care-are-needs-not-wants-2010-08-06?siteid=nwhpf