Poll: More Boomers worry about high gas prices and medical costs than retirement

NEW YORK, April 19, 2006 — More Baby Boomers are concerned about gas prices and uninsured medical costs than about retirement and other long-term expenses, according to a new poll conducted by Harris Interactive for the AICPA.

“The mounting costs associated with a trip to the hospital or an unusually cold winter have the potential to disrupt consumers from saving for retirement,” said Carl George, CPA, chair of the AICPA’s National CPA Financial Literacy Commission and CEO of Clifton Gunderson LLP. “Consumers are juggling today’s real financial pressures at hand and trying to save enough for their retirement.”
The results of the poll revealed that 51 percent of Americans age 45 and older have greater worries about short-term financial issues — rising energy costs, uninsured medical expenses, price of gas and credit-card debt — than they do about longer-term concerns like caring for aging parents, lack of savings for an emergency and even retirement itself.

“The higher these rising costs are today, the more time Americans will have to spend working to replace those funds that were earmarked for retirement,” said George. “In some cases, this could mean working additional years to recoup what is spent today on necessities. Americans need to remain focused on their savings goals and plan for contingencies like medical, education and energy cost increases in order to have a realistic view of how they are going to reach those goals.”

Basic steps to take

The AICPA’s 360 Degrees of Financial Literacy program has set up a consumer Web site with hundreds of free tools and resources to help educate consumers about personal finance matters, including retirement. Below are some steps baby boomers can take to plan for any contingencies related to an unexpected rise in costs for basic necessities.

Stick to your plan — keep saving. You already should have been working off of a savings plan at this point in your life and have progress toward building your retirement nest egg. Try to keep saving so that you maintain momentum toward reaching your goals. Take some proactive steps such as those shown below to help minimize the risk of unexpected expenses.
Have an emergency fund. The years ahead could prove to be a bit bumpy, especially with higher interest rates and rising energy costs, so it is advantageous to have a financial cushion. Set your sights on saving between three and six months' worth of living expenses. This includes rent or mortgage, food, utilities, debt payments and other regular expenses you can't put off even in an emergency. Remember, emergency-fund money has to be safe and accessible, so steer clear of longer-term instruments like certificates of deposit (CDs). You'll want to investigate money market accounts or traditional savings accounts.
If you can’t beat ’em, join ’em. Consider carpooling as a way to minimize the impact of rising gasoline prices. If you frequently carpool to a job or to children's activities, you'll want to change your liability insurance coverage to reflect the additional passengers in your car. Eighty-five percent of people who carpool overlook this, according to a recent study by the Independent Insurance Agents and Brokers Association of America. Also, shop around for the best gasoline prices in your local area. Some Web sites track local prices, including www.gasbuddy.com or www.gaspricewatch.com.
Make your home more efficient. One way to help manage the rising energy and home heating costs is to winterize your home. Make sure your windows and electric sockets are properly sealed and insulated. Manage your thermostat more effectively, lowering it by a degree or two from your normal temperature. Turn off lights and electronic devices when they are not in use. Use fans instead of air conditioners to cool the interior. Take short showers instead of baths. The U.S. Department of Energy has predicted a 16 percent increase in average heating-oil prices this winter compared to last year. Heating oil prices during the 2004-05 heating season were 34 percent higher than the previous winter. Consider ordering your home heating oil further in advance before shortages and price increases occur. When combined, these small steps can save you money in the long run.
See a specialist. Seek the help of a personal financial planning specialist such as a CPA if you are faced with a larger unanticipated expense like a medical situation. Since this has the potential to erode your retirement savings, a specialist may be able to help you design a plan to counteract the effect.

Harris Interactive surveyed 1,000 U.S. adults 18 and older during March 2006 under the aegis of the AICPA's "360 Degrees of Financial Literacy" campaign.

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