More than half of baby boomers only have $250,000 or less saved up for their future retirement. (iStock)
Baby Boomers are one of the largest generations in America, comprising those 60 to about 80 years of age. Many within the generation are already at retirement age, but have little saved for their retirement, an Alliance for Lifetime Income study found.
Assuming baby boomers live an additional 20 years or more after retirement, two-thirds of baby boomers in their 60s won’t have enough savings to maintain their same lifestyle during retirement. Over half of boomers have less than $250,000 saved and plan to rely mostly on Social Security for income.
An additional 14.6% have saved $500,000 or less, the Alliance study reported. Most Americans believe they’ll need close to $1.5 million to retire comfortably, so many baby boomers aren’t even halfway to that number.
“America has never seen so many people reaching retirement age over a short period, and well over half of them will find it challenging to meet their needs through their retirements, let alone maintain their current standard of living,” said the former Under Secretary of Commerce for Economic Affairs Robert J. Shapiro. “They lack the protected income that many older Boomers have from solid pensions or higher savings.”
The lack of savings is greater for certain social groups. The average retirement savings for all male boomers just hitting retirement age is $269,000, but it’s $185,000 for women. The divide widens even more for non-white retirees. White retirees in their 60s have $299,000 saved, on average, compared to $123,000 for Hispanic savers and $49,000 for Black savers.
Although baby boomers struggle to save for retirement as a whole, they do have more social protections in place than younger generations.
“The saving grace for some Peak Boomers is that they can count on the added protected income that a pension provides in retirement,” Jason Fichtner, executive director of the ALI Retirement Income Institute, said. “However, since only 4% of all private sector workers had protected income from a pension as recently as 2020, this economic study of Peak Boomers should be a cautionary tale to all Americans planning for retirement,” said Fichtner.
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Nearly 20% of Americans over 50 don’t expect to retire
It’s not just the baby boomer generation that’s struggling with retirement savings. Gen Xers are having a hard time saving as well.
About 20% of adults 50 years of age or older have no retirement savings, an AARP survey found. Within this age group, 61% are seriously worried they won’t be able to retire because they won’t be able to support themselves financially.
“America is facing a serious retirement crisis…Congress must act more swiftly to provide the financial support older Americans need and deserve,” Nancy LeaMond, AARP executive vice president and chief advocacy and engagement officer said.
Americans are more likely to save for retirement if they have access to a plan via their workplace. Unfortunately, close to 57 million Americans don’t have access to these plans, AARP’s study reported.
“We [AARP] have worked with 19 states to create programs to make it easier for people whose employers don’t offer a retirement plan to be able to save for their future. But about two-thirds of states have yet to act, and we await action from the federal government,” said LeaMond.
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Younger generations are growing wealth faster than their elders
Workers in younger generations are starting to save and grow their wealth faster than members of older generations.
The average wealth of households under 40 was $259,000 at the end of 2023, said an American Progress study. This is close to the amount baby boomers have saved for retirement in their 60s. It’s also a 49% increase since the fourth quarter of 2019. In 2019, the average wealth for the same households was $174,000.
Households ages 40 to 45 saw their wealth drop by 7% for the same period, while the average wealth for those ages 55 to 69 rose by 4%.
Millennials are building wealth faster, in part, due to housing. Average housing wealth grew by $22,000, American Progress’s study found. However, investments are the main reason the generation’s wealth is rising. Wealth related to investments like stocks and mutual funds rose by $31,000.
Owning small businesses and keeping money in the right bank have also contributed in small ways to millennials’ wealth. Wealth derived from bank deposits and other liquid assets grew by $9,000 and wealth from businesses increased by $10,000.
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