BY ANN C. LOGUE for BUSINESS INSIDER
The great baby-boomer retirement wave is upon us. According to Census Bureau data, 44% of boomers are at retirement age and millions more are soon to join them. By 2030, the largest generation to enter retirement will all be older than 65.
The general assumption is that boomers will have a comfortable retirement. Coasting on their accumulated wealth from three decades as America’s dominant economic force, boomers will sail off into their golden years to sip on margaritas on cruises and luxuriate in their well-appointed homes. After all, Federal Reserve data shows that while the 56 million Americans over 65 make up just 17% of the population, they hold more than half of America’s wealth — $96.4 trillion.
But there’s a flaw in the narrative of a sunny boomer retirement: A lot of older Americans are not set up for their later years. Yes, many members of the generation are loaded, but many more are not. Like every age cohort, there’s significant wealth inequality among retirees — and it’s gotten worse in the past decade. Despite holding more than half of the nation’s wealth, many boomers don’t have enough money to cover the costs of long-term care, and 43% of 55- to 64-year-olds had no retirement savings at all in 2022. That year, 30% of people over 65 were economically insecure, meaning they made less than $27,180 for a single person. And since younger boomers are less financially prepared for retirement than their older boomer siblings, the problem is bound to get worse.
As boomers continue to age out of the workforce, it’s going to put strain on the healthcare system, government programs, and the economy. That means more young people are going to be financially responsible for their parents, more government spending will be allocated to older folks, and economic growth could slow.
“The system has failed in thinking from a long-term perspective,” Rita Choula, the senior director at the AARP Public Policy Institute, told me. And that failure is falling on the shoulders of young people.
Not all boomers are rich
It’s undeniable that some boomers will enjoy a cushy retirement. The Fed’s most recent Survey of Consumer Finances found that the average net worth for people ages 65 to 74 was $1.8 million, the wealthiest age cohort in the survey. But this aggregate number hides the fact that the financial outlook for many of America’s retirees is bleak.
Average net worths can get inflated when there’s a lot of wealth held by a few people. A more accurate indication is median net worth, which prevents the ultrarich from skewing the picture. In the Fed’s survey, half of Americans ages 65 to 74 said they had less than $410,000 to supplement Social Security and fund their retirement — much of which might be tied up in real estate. The median retirement account for that age group has only $200,000 — meaning that half of 65- to 74-year-olds have even less saved up. Given these numbers, it’s clear that a significant proportion of boomers are not set up for their final years. In fact, the National Council on Aging estimates that 17 million people over 65 are considered economically insecure.
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