Retirement Not Boom Times for Boomers?

Baby boomers, a generation spanning the better part of two decades, has members who are retired, but plenty of members who are in the workforce and will be for years to come. And a recently released report on financial security and aging suggests that may be a good thing.

In “Seeing Our Way to Financial Security in the Age of Increased Longevity,” the Stanford Center on Longevity notes that not only has longevity increased, so have health care costs, while the standard retirement age has not changed. Which means, the report says, “that, absent other means, funds have to be stretched across a longer lifespan.”

This is more than something of passing interest, the report indicates. “Whether or not older Americans are well prepared for retirement and longevity has profound implications in many arenas, including at the individual, family, and societal level.” And this affects not only lifestyle, but also happiness and well-being, the report indicates. “A lack of retirement preparation is associated with increased depressive symptoms in the elderly. On the other hand, retirement planning is significantly and positively associated with life satisfaction and psychological well-being,” says the report.

Key Findings

The report says that, of the half American workers that participate in an employer-provided retirement plan, “most members” of every age group “do not meet targeted retirement saving goals even under the most optimistic assumptions, which considers both employee and employer contributions.”

It is “highly likely,” the report says, that given their assets and debt levels — as well as spending trends — baby boomers will need to spend less when they are retired, continue working at least into their late 60s, or both. It also cites statistics that they say “illustrate that the majority of American workers from all backgrounds aren’t on a path to retire full time at age 65 under their pre-retirement standard of living.”

The Center is not optimistic about spending reductions, saying that cutting spending “can be easier said than done,” adding that “after their children leave home, many households spend much of their extra income, rather than saving it.”

The report does include some good news, noting that entrepreneurship is alive and well among baby boomers and “appears strong when compared to younger age groups.”

Suggestions

The report suggests that baby boomers consider an alternative view of retirement that includes the possibility of working longer, more deliberately spending savings and adjusting the standard of living.

The Center has a variety of suggestions for policymakers. It calls it “critical” that they and researchers acknowledge baby boomers’ financial vulnerability as the approach retirement. And, it adds, policymakers may want to discuss how to help baby boomers embark on new business ventures and sustain them. Further, it says, policymakers should consider the fact that there is variation among the baby boomers themselves, as well as their savings and debt levels, in order “to get a complete picture of retirement preparedness among these diverse generations.”