1) Baby boomers, born between 1946-1964, represent a large portion of the US population and have had significant economic impact.
2) As baby boomers age and retire, they are living longer lives than previous generations and have different retirement expectations and challenges than past retirees.
3) These include having to financially plan and invest for potentially decades of retirement without traditional pensions, rising costs of healthcare, and uncertainty around Social Security funding for their large population.
1) Baby boomers, born between 1946-1964, represent a large portion of the US population and have had significant economic impact.
2) As baby boomers age and retire, they are living longer lives than previous generations and have different retirement expectations and challenges than past retirees.
3) These include having to financially plan and invest for potentially decades of retirement without traditional pensions, rising costs of healthcare, and uncertainty around Social Security funding for their large population.
1) Baby boomers, born between 1946-1964, represent a large portion of the US population and have had significant economic impact.
2) As baby boomers age and retire, they are living longer lives than previous generations and have different retirement expectations and challenges than past retirees.
3) These include having to financially plan and invest for potentially decades of retirement without traditional pensions, rising costs of healthcare, and uncertainty around Social Security funding for their large population.
"Baby boomer" is a term used to describe a person who was born between 1946 and 1964.
1 The baby boomer generation makes up a substantial
portion of the world's population, especially in developed nations.
2 According to the latest census report, it represents 73
million of the population in the United States, as of July 2019.
3 As the largest generational group in U.S. history (until
the millennial generation slightly surpassed them), baby boomers have had—and continue to have—a significant impact on the economy.
4 As a result, they are often the focus of marketing
campaigns and business plans. Understanding a Baby Boomer
Baby boomers emerged after the end of World War
II when birth rates across the world spiked. The explosion of new infants became known as the baby boom. During the boom, 76 million babies were born in the United States alone Most historians say the baby boomer phenomenon most likely involved a combination of factors: people wanting to start the families that they put off during World War II and the Great Depression, and a sense of confidence that the coming era would be safe and prosperous. Indeed, the late 1940s and 1950s generally saw increases in wages, thriving businesses, and an increase in the variety and quantity of products for consumers.
Accompanying this new economic prosperity was a
migration of young families from the cities to the suburbs. The G.I. Bill allowed returning military personnel to buy affordable homes in tracts around the edges of cities.
This led to a suburban ethos of the ideal family
comprised of the husband as the provider, the wife as a stay-at-home housekeeper, plus their children. By 2034, it is projected that older adults will outnumber those under age 18 for the first time in U.S. history. In a 2021 article by the Brookings Institution, Baby boomers spent about $8.7 trillion in 2020 on goods and services. This is expected to increase to $15 trillion by 2030.
And even though they are aging (the very youngest
boomers are in their late 50s as of 2021) they continue to hold corporate and economic power; in the U.S., 50.3% of personal net worth belongs to boomers Baby Boomers and Retirement: Why the Boomers' Retirement Is Different
The first of the baby boom generation became eligible
to retire in 2011.
In many ways, the way they spend their post-work
years will be different from that of their parents; members of what's often called the Greatest Generation. Much Longer Retirement
Many people in previous generations worked as long
as they could and few were fortunate enough to have a retirement that would be considered golden by today's standards.
America's post-World War II prosperity made things
better for the greatest generation, who benefited from a workforce in which there were over 16 employees for every retiree.
Plenty of people in that generation were able to retire
at the official age of 65.
One change between then and now is that a large
percentage of the 73 million American baby boomers are expected to live longer than their parents did. So their retirement period will be longer Higher Expectations
With more health and energy—and their children now
adults—boomers who can afford it expect to spend at least early retirement fulfilling travel dreams and other bucket-list items. Those who reach retirement age now are often healthy enough to run marathons, build houses, and even start businesses.
Instead of relocating to retirement communities,
many are migrating to small towns that can offer employment and education opportunities.
Other boomers are choosing to move into urban areas
to take advantage of amenities, such as public transportation and cultural attractions. More Investment Choices, Less Investment Safety
The greatest generation had relatively few
investment options: mostly ordinary bonds and certificates of deposit. But those are relatively secure forms of income.
That's not true for the boomers. What's more, with a
longer lifespan comes more opportunity, and need, to take at least some investment risks to ensure keeping up with inflation.
Today's boomers are faced with an ever-expanding
universe of income securities. The investment industry has provided a lot of rope to invest, and a lot of new and exciting ways to lose it all. Rising, Instead of Declining, Interest Rates
In the 1980s, when the greatest generation started to
retire, interest rates exceeded 19%. This was good for savers (and terrible for homebuyers). Ever since, interest rates have been decreasing, with some periods of increases.
For example, during the COVID-19, interest rates
dropped to a target of 0% to 0.25% in March 2020 but rose two years later to target of 0.75% to 1% as of May 2022. The long decline in interest rates provided a great return to bond investors. target
The boomers are facing the very opposite situation.
Instead of an ever-declining interest rate, they are facing the likelihood of steadily increasing interest rates during their retirement. Personal Savings Instead of Pensions
The greatest generation might have had a lower per
capita income, but many of its members also had corporate or union pensions, which could be a considerable amount after working for a lifetime for the same employer, as was once common.
But the economy changed, many large corporations
merged or disappeared, and unions dropped from 20.1% of workers in 1983 to 10.3% in 2019, according to the U.S. Bureau of Labor Statist The IRS allows for increased contributions to retirement accounts for those age 50 and older, known as "catch-up contributions.
As for the federal pension known as Social Security,
there is concern that it could fall short. The problem is that the baby boomer generation is much larger than previous generations; Generation X, which follows it, is much smaller; and even the larger-than- the-boomers millennial generation isn't large enough to offset the increased longevity of boomers A Retirement Fund Shortage?
In addition to many not saving enough money,
boomers experienced the Great Recession at a crucial time for their retirement savings. Many boomers jumped into expensive investments, mortgages, and startups in the late 1990s, only to find themselves struggling to make those payments a few years later; many found themselves completely tapped out or their mortgages underwater.
For those with such debts, savings have been
put on the back burner. What's more, boomers who responded to the Great Recession by turning ultra-conservative with the savings they had left got a second hit: By not holding enough of their portfolios in stocks, they’ve missed the huge bull market that followed and risked letting their nest eggs stagnate.
Meanwhile, wages have not increased
significantly for many parts of the population
How Boomers Can Prep for Retirement
Taking some of these steps could help baby boomers
manage retirement.
Don't Retire (At Least Not Too Soon)
One idea might be the most non-traditional of all:
don't retire. Or at least, delay doing so beyond the proverbial age 65, 66, or 67 (depending on birth date). Whether that means working longer, consulting, or finding a part-time gig, being part of the workforce can help boomers financially and emotionally. Plan for Health Issues
Boomers, who came of age during the freewheeling
1960s and 1970s, often project an image that they will stay active forever; and indeed, many are in better shape than their forebears at the same age. Still, the human body isn't invulnerable.
Obesity, diabetes, hypertension, and high
cholesterol are inevitably all on the rise in the boomer population. Cancer and heart disease are the leading cause of death. And then there's dementia: according to the Institute for Dementia Research & Prevention, it is estimated that 1 in 6 women and 1 in 10 men who live past the age of 55 will develop dementia in their lifetime. Make a Will
As of May 2020, 45% of adult Americans have a
living will, which details their medical wishes, such as whether to be put on life support should they become unable to articulate their wishes.
About 26% of boomers over 65 have not drawn up
wills that stipulate how their assets should be distributed in the event of their own deaths, leaving the door open for a host of potential legal and financial problems.
The eldest boomers are still in their early 70s. That's
the time to make decisions about healthcare and also about who should be in charge of their life and finances, should they be unable to make responsible decisions due to illness or incapacity.
Boomers shouldn't leave those decisions to others;
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