Skip to comments.Study: Many Boomers Lack Retirement Fund
Posted on 07/30/2007 7:31:07 PM PDT by traumer
Study Says Nearly One-Third of Older Baby Boomers Haven't Saved Enough for Retirement
NEW YORK (AP) -- Nearly one-third of baby boomers ages 51 to 61 are at risk of not having enough in savings to finance a comfortable retirement, according to a study being released Tuesday by the Center for Retirement Research at Boston College.
With its analysis, the center has joined the national debate over how much savings is enough -- and has done so on the side that says there's a shortfall.
"We just don't believe people are saving too much," Alicia H. Munnell, a professor of management sciences at Boston College and director of the retirement research center, told The Associated Press.
A recently published academic study looked at the retirement preparedness of Americans who were in their 50s in 1992 and concluded that at least 80 percent had more than enough assets for retirement. Other scientists have argued that Americans may be saving too much.
The new Boston College study evaluated the same 51-61 age group, but looked at their finances in 2004, and found 32 percent to be "at risk" for not being able to maintain their preretirement standing of living in retirement.
The difference between the results, the center said, has to do with changes in the financial environment. For one thing, Americans now must wait until they're older than 65 to collect full Social Security benefits; meanwhile, lower interest rates mean they'll probably collect less on annuities and other investments. And many of today's workers do not have pensions like the earlier generation but must rely on worker-funded 401(k) retirement accounts, the center said.
Munnell said Americans have two choices -- to save more or to work longer.
For older people, "working just two years more ... can make a substantial difference" to retirement preparedness, she said.
"Working longer has a powerful effect because it shortens the period over which you have to support yourself and ... lets you put off tapping your 401(k) and collect higher Social Security benefits," she said.
The study was done using the center's National Retirement Risk Index, developed with funding from Nationwide Financial, the long-term savings and retirement product division of the Nationwide Mutual Insurance Co.
Keith Millner, senior vice president and head of Nationwide Financial's in-retirement division, said "there is a retirement crisis" because people are living longer, health care costs are escalating and workers aren't saving enough.
"The No. 1 issue is inertia -- people aren't doing anything," he said. "They need to get educated, get engaged."
Young workers especially can benefit from saving more because of the impact of compounding, he said.
Center for Retirement Research: http://www.bc.edu/crr
Nationwide Financial: http://www.nationwidefinancial.com
Why would Mr. Boomer stay in Indiana, when it was you that stated it will be the illegal aliens that will be buying all the homes the boomers are trying to unload.
Well, I would completely disagree with the illegal aliens part. But the Boomers can retire where they want, if it makes sense to do so.
LOL...I think we agree.
Paintin’ with kind of a broad brush, are we?
Damn, that’s a broad brush you paint with.
Listen, I’m ticked off about the Social Security Scam, too (I’m almost 40), but I know the Boomers didn’t create the problem—they just haven’t done anything to fix it.
But they are not all “scum,” and they were not all “socialist liberal slugs.”
Step away from the bong, my friend.
BTW, 3000 feet does not qualify as a McMansion.
And if things are THAT lousy in Michigan (which I know around Detroit, they are)...
Florida and Arizona aren’t states where many people retire too. My bad......
Hmmm, just curious, why would two old married boomers need 3000 square feet? Sounds big to me. What is a McMansion? 4,000 square feet? LOL!
I'd really hate to heat and cool a 3k square foot home.
Many Boomers aren’t old empty nesters, yet. My older brother still qualifies as a Boomer, being born in 1964. They have 4 kids at home.
We have three kids, and I work from home, so we have about a 2800-square foot home, but it is hardly a McMansion. It’s a modest rambler with a basement.
3000 or 4000 sf for an empty nest couple? That might be excessive, unless the grandkids are always there (doubtful).
I stand corrected:
The foremost characteristic of a McMansion is the impression of its largeness, particularly when compared with smaller, older nearby housing.
This style of house will usually have two floors, although it is common for some ground floor rooms (particularly foyers and “great rooms”) to be two stories tall. McMansions can also be one-story, but these usually feature a facade appearing to be 2-story. Simpler versions will have a standard rectangular footprint, while more complex (and usually more expensive) floorplans will have additional wings or projections. Roofs are usually voluminous; they are often constructed with framing that, while inexpensive, makes the upper interior space unsuitable for attic storage or additional rooms.
The typical square footage is in the range of 3000 (280 m2) to 5000 ft2 (460 m2). In previous decades, modest but comfortable living space for a family of two adults and two children was long considered to provide: two small bedrooms, one larger bedroom, a single large bath, a living room intended for both daily and formal use, a dining area also for daily use and a modest kitchen, with laundry space provided within a one or two car attached garage. Now, in countries where McMansions are popular, only two bedroom, two bath condominiums, single duplex units, or individual zero-lot line pairs are likely to be this size and marketed more to affluent bachelors/bachelorettes, childless couples, and/or empty nesters and generally not intended for families with children.
(we all know Wikipedia is never wrong)
The reason for this is it's so darn expensive for the younger people. Many of these young adults will be lucky to ever afford even modest homes, even with 2 incomes...
Then again there is always that interest only, no down, low down.....Uh no forget that.
Men who fought in Viet Nam for the most part were "boomers".
58,000 of them are laying dead. An untold number of others still bear the scars.
Don't insult an entire generation as "socialist liberal slugs".
Many of your fellow FReepers are good, decent, hardworking, conservative Baby Boomers. And they are not representative of the socialists you rightly despise and begrudge. The problem is that you made no distinction. Attacking all “baby Boomers” with such pejoratives, merely because of their birth date, is reckless and inaccurate.
Good article. THey bring up a good point that many states and local governments are going to want a piece of the boomer retirement pie, many being considered non-traditional retirement centers, but from the article as well:
“In spite of shrinkage in their market shares, the top three retirement destinationsFlorida, Arizona and Californiahave nothing to worry about, says Peter A. Morrison, a demographer with the Rand Corp. The absolute number of retirees migrating to those states continues to go up, he points out, noting that the sheer volume of boomer retirees will create enough demand to sustain the traditional retirement states and boost rural economies at the same time”
I know what you mean about the kids not being able to afford modest homes. I just moved to this mountain valley 2 years ago, and housing prices have been going through the stratosphere.
Parents who have grown up in this valley their whole lives, and whose families have been here for generations, are now seeingh their children moving away, because they cannot afford to buy or build a home here to begin their own families.
I do wonder if in ten years there might be a "Booming" market for condos and patio homes?
How is the Grand Rapids area doing? I used to go out there a few times a year for business (this was 3 or 4 years ago) and it seemed to be growing quite a bit.
Actually, our founding fathers were very anti establishment too, and were considered rebels, non-conformist etc.
You cannot deny that most of the modern problems today have their root in the boomer dominated 60s and early 70s.
I do, And I could not disagree with you more here. It's my position that it's the every growing, expanding, intrusive government that is the problem, going back to the early 60s, and fast forwarding to what we have today. Starting at about LBJs time.
Starting around FDR’s time, I’d say
Does anyone realize the implications of the current SS benefits stated below?
Ex Spouse’s Social Security:
IF you do not remarry before age 60, you will be eligible to receive full Social Security survivor benefit (as early as age 60). This survivor benefit is equal to the full amount of your former spouse’s Social Security they were receiving at the time of their death. THe current spouse will also receive the same amount if they were married for at least 10 years.
So, as many times as “we” marry and divorce, our EX’s can and may receive full survivor benefits. FULL is the key word. 3 spouses, three FULL benefits. Who is paying for that? Surely not the dead person. The dead person pays in, marries a few times, and if one, two or three of them do not marry again?????
And if I'm not mistake, LBJ was born in the early 1900s.
FDR and LBJ were certainly not baby boomers.
If the illegal aliens will be purchasing all he boomers homes, where will all the boomers be living?”
The boomers will have all been murdered by the illegals.
What are you talking about? There is Social Security isn’t there?
Some people were raised during the Carter years where they learned to buy it today because tomorrow it would cost more. They learned what you wanted was worth more than the money it took to buy it tomorrow. Why save?
I'm a retired Boomer and I know what my generation did with dope and free love. I didn't like the disintegration of the family, but I was in the minority BIG time. I still am. But my parents were the ones brought up believing that taking money from Warren Buffet would somehow help thousands of "the little people". Only in the last few years since Reagan and Gingrich have people started to realize if you take a dollar, 66 cents stays in Washington to be flushed down some alphabet sink hole.
I'm 56, been retired since 50, my wife didn't work, we have one daughter in college, and I have NO pension. I took a buyout from SBC and trade options and stocks for about a 16% annual return, so far. I have no inheritance and have never won anything. I saved and invested since Nixon was president and the DOW was 500. The last few years I was working, I saved $800 a month in my 401k and separate IRA. I lost about 30% of my money in the Tech bubble, but still retired at 50. I'm not doing as well as I wanted, but it beats working. I have tachycardia, high blood pressure and degenerative disk disease. I can't seem to get disability, but I'm to boinked up to work a full day. If I didn't trade options or stock and relied on just the interest on my money, I could last around 15 years or so as long as inflation wasn't as bad as the Carter years.
It can be done, but you can't always buy that new truck,( mine's a '91 GMC), you can't always go on vacations to exotic places( a hunting trip to Colorado every other year or so and maybe a weekend here and there), and you certainly can't buy a Mc Mansion and feed the AC,( I have a 2700 sq ft house on 1.16 acres with a 3 car garage and my house note is $515 for about 7 more years.)
I would love to have a diesel pusher and the fuel to go in it, but that just isn't going to be after the crash in 2001.
What I'm saying is that it can be done, but most don't have the willpower to say no to themselves. My last new car was a '91 GMC truck. Every car I own is a used car. I haven't bought a boat, only 2 motorcycles, and no ATV's IN MY LIFE! I do have about $10 grand in a gun collection. I do hunt when I get the chance, but it usually costs less than a grand a year for that.
The government can't stop you from saving, no one can stop you from retiring but you. The world sucks, America is pretty much lost, and it won't be easy in the future, but it never was. Blaming Boomers or the government won't put one extra dime in your pocket. We all should vote, but I doubt it will change a thing. When Bush passed the tax cuts and tried to get Social Security to be about 5% privatized, I wonder if any Dems have figured how much money they cost the people when they blocked it? I remember the SOTU speech when Bush mentioned this and the Dems stood up and cheered. Since then the market has gone from around 8k to 14k. But at least SS has gone up about 3%. SAVE YOUR MONEY!!! And by all means LEARN about the stock market and real estate. The stock market isn't rolling dice in Vegas. There are ways of "beating the house". Never buy a stock and throw it in a drawer. Learn puts and calls and how to read a chart.
If you want to indulge yourself in a very depressing exercise, add up all of thetaxes you pay, starting with the roughly 15% Social Security tax (direct from you and the equal amount from your employer). By the time you are done, you will have a solid case of the blues.
As far as their children are concerned?
Two words; Terry Schiavo.
Well that is a little light even as to the Federal, since 15% of your pay goes to Social Security alone. Now add in state, local, real estate, sales and assorted other taxes and see what you get.
Sheeite, that's nothing, wait until those ofus younger than you get astuck paying for our senior prescription coverage and health care, with a housing market all shot to hell because you are all in retirement homes.
Yeah well...we told ya’ so.
A friend is 62 this year. He has worked since he was 21 (college grad - paid his own way). He has had only three employers in thirty years. He bought his house @ 1976 for less than $50k. His wife always worked part time. He can't afford to retire before 70. Why? Simple, like thousands and thousands of other boomers he mortgaged his assets to pay for his three daughters' educations (each of which cost more than he paid for his house)...selfish bastard.
You children are really boring.
You children are really boring. And, I won't need my monthly payment when it comes in. But I'll take it and blow it all on tango lessons knowing that it twists your nipple.
What are you talking about? The FICA is 6.2% of your pay up to @ $90k. If you make $150k your FICA is only 3.5% of your pay. Mouthing off and not knowing even the basics...
Remember, smokers HELP the Soc Sec fund !LOL...
Perhaps one day you will learn how to work smart instead of hard.
I had some pretty good savings socked away in my forties. Then, after 9/11, the place I worked shut down.
It took me ten months to find a new job. I had a kid in college, but could not qualify for scholarship money because I had made too much money the year before. That had to be paid for, because you don’t want someone in their junior year with a 3.5 in engineering dropping out. (Well, maybe some freepers would make their kids drop out, but I would not.)
Guess what I lived on? Those savings. I went through most of them before finding that new job. And, no — we were not extravagant. We canceled plans for a 25th anniversary vacation and used the money for living expenses. We cut back our costs and dumped luxuries. The wife got a job and I looked after the kids. (We have two other kids, both at home then.) I worked odd jobs and consulted to bring in some extra cash.
But the week I started my new job, I emptied all but $500 out of my savings account to pay for the next month’s expenses. God knows what would have happened if I had been unemployed another two or three months — probably would have had to go deep in debt.
I am not complaining, just explaining. And only now, after five years, am I managing to build my savings up again. (We had to pay relocation expenses, and have another kid in college.) And I also know the job I have now will probably disappear before the end of 2011, and am planning to weather another storm then.
Actually my biggest fear is not having to put off retirement. I enjoy working and the job I do. My fear is ending up involuntarily retired at 55 or 56 when the current job ends. Employers are reluctant to take an “elderly” engineer — after all they will be retiring soon. (Never mind that a college recruit is just as likely to leave before five years are up.)
Assuming I am healthy, I would as soon keep working until I am 75 or so. (Why not? The work I do is fun, not physically demanding, and pays well. And I do good work.)
I can understand wanting to retire at 65 — or even 55 if you are in a dangerous, physically demanding work (puddling steel in a steel mill for example). But early retirement is unnecessary for those in an office environment.
Only contribute to your 401k up to the point of matching - not beyond.
For the remainder, invest in other venues. There are more profitable ventures than a 401 once company matching is out of the equation.
Whoa...talk about making a mountain out of a molehill...I think Proud USA’s point was that some boomers will be helped along by a high-value home. That’s it.
No, but someone in Maryland or Cali can retire to somewhere like North Carolina using that method. It doesn’t work for everyone.
So true. It has worked for me. I'm trying my hardest to get it drilled into my 3 grown kids heads. If folks would just learn to live by this one financial precept (and save the difference), many would not be in the leaky retirement boat they find themsleves in.
Every year I save & save - it just about covers my taxes. And I am not a boomer, born in ‘66. Socialism is stacked against those who play by the rules. Where’s my guv’mint tit?