The Positive Side of the Boomers’ Retirement

Most of the financial media is filled with articles about how poorly prepared the Baby Boomers are prepared for retirement. Here’s a different take. It cites several studies that crunched the data and concluded that the early Baby Boomers are in pretty good shape. They had significant home equity before the housing crash (because they were early home purchasers) and overall lost only a small percentage of their net wealth in the financial crisis and its aftermath.

The studies differ from the more widely-publicized studies for several reasons. One reason is these studies take Social Security into account. Most studies, which are sponsored by financial services firms that want to increase savings and investments, don’t consider Social Security. Yet, it’s an important foundation of retirement income and the bulk of retirement income for many American retirees.

These studies also differentiate among the Boomers. They focus on the early Boomers. They also consider different segments of the early Boomers. While most of the early Boomers will do well, lower-income Boomers are in bad shape and will need help in retirement.

The right conclusion here is to ignore rules of thumb and general comments when planning for retirement. Consider your own needs and circumstances and develop an individual plan.

Put it this way: A majority of boomers seem to be on a reasonable path toward retirement. Yes, many—perhaps a third—will find that it pays to earn a paycheck for a few extra years, hardly an unrealistic expectation considering today’s 65-year-old has the same mortality and health as a 54-year-old did in 1947. The combination of accumulated wealth, additional savings, and working longer means many leading-edge boomers, as well as the younger members of the generation following them, won’t retire penniless. The future is brighter than the searing experience of recent years would suggest.