MIAMI, FL – A recent study has revealed that the youngest baby boomers, born in the era that brought us Beatlemania, are facing a potential retirement crisis. This group, known as “late boomers,” encompasses those born between 1960 and 1965 and has significantly less retirement wealth and savings compared to older baby boomers and the “war babies,” who were born between 1942 and 1959.
The research, conducted by the Center for Retirement Research at Boston College, compared different generational groups at the same age range, adjusting for inflation. The findings show that late boomers have experienced a decline in retirement wealth and savings, with the average individual in this group having about $280,000 in combined wealth from Social Security, pension benefits, and 401(k)-type retirement plans at ages 51 to 56, in inflation-adjusted dollars.
This is substantially less when compared to older generations. The average mid boomer, born between 1954 and 1959, had about $332,000 in total retirement wealth, while the average early boomer, born between 1948 and 1953, had nearly $346,000 at the same age range.
One prominent factor contributing to the decline in retirement savings for late boomers is the Great Recession, the longest economic downturn since World War II, which occurred from late 2007 through mid-2009. This downturn had a significant impact on late boomers who were in their top earning years at the time, leading to a decrease in employment rates and diminished earnings for those who managed to keep their jobs.
The study also found that late boomers’ retirement funds and earnings never fully recovered from the effects of the Great Recession. This has left many individuals in this group with inadequate retirement savings, potentially leading to decades of hardship in their later years.
Additionally, the wealth gap between late boomers and older Americans can also be attributed to demographic differences, with late boomers being less likely to be married, less likely to have college degrees, and more racially diverse. Black and Hispanic households, in particular, hold less retirement wealth than white households, although the gap is reportedly shrinking.
The implications of this study are significant, as it raises concerns about the financial well-being of late boomers as they approach retirement age. Advocates for older Americans warn that these individuals could face prolonged financial challenges, including struggling to keep up with healthcare expenses and the potentially crippling costs of long-term care.
In conclusion, the study sheds light on the impact of economic downturns on retirement savings and provides valuable insights into the financial challenges faced by late boomers, serving as a reminder of the importance of financial planning and preparing for retirement.