Many of America’s 60-Year-Olds Are in Financial Peril
A bruising recession and the disappearance of pensions have left many young baby boomers (people born after world war II ended and up to 1964), who are now 60 or more years old, financially exposed, reports a Wall Street Journal 7/24/24 article.
Born in a midcentury, postwar America brimming with promise, many of the youngest boomers are still sporting financial bruises from the 2007-09 recession and are adversely affected by the nation’s steady shift away from guaranteed pensions.
“The most important things for me right now are a place to live indoors, water and food,” said one of these Boomers, who has about $3,000 in her retirement accounts; “And thinking about how I’mgoing to provide that for myself from now until I drop dead.” This “Young Baby Boomer” generation, is about 70 million people, which is one in five Americans—cover a 19-year time span stretching from the aftermath of World War II to 1964, the year the Beatles made their debut on the Ed Sullivan Show.
Some older Americans—including young boomers with retirement accounts powered by a booming stock market—remain a major force in the economy. Those 55 and up control nearly 70% of U.S. household wealth, Federal Reserve data show.
But that age group also includes older adults with little if any retirement funds socked away, or with only Social Security to support them, who are facing golden years laden with risk. For millions of younger boomers, who could live at least two more decades, a lost job or expensive medical problem could upend their stability while ramping up pressure on younger generations.
The baby-boom generation’s long span means the youngest boomers hit major life events at different times than their elders. Their midcareer years, when earnings typically start to peak, got upended by the 2007-09 financial shock, according to retirement experts. Younger boomers without traditional pensions had to shoulder more investment risk while saving for retirement. There is also a greater share of nonwhite young boomers who are more likely to lack retirement accounts.
About a third of younger boomer households lacked retirement benefits beyond Social Security in 2022, the most recent year available, according to a closely watched Federal Reserve tool called the Survey of Consumer Finances. When the older boomers were roughly the same age, a smaller amount—one quarter—were missing these retirement benefits.
Many others have only meager savings or are worried that soaring health costs will quickly drain their reserves. More of these young boomers “are going to enter into retirement without the resources they need,” said David John, who studies retirement savings issues at the AARP Public Policy Institute.
For many, making ends meet will likely mean having to work well into old age, if they are able. But they may also have to rely on younger family members as caregivers and for financial support. A large number of seniors in poverty could also increase reliance on Medicaid, the health program for the poor, which foots bills for long-term care including nursing homes.
A recent study looking at the roughly 30 million young boomers who will turn 65 between this year and 2030 determined that just over half have no more than $250,000 in financial assets. This makes it likely these people will have to rely on Social Security after burning through savings as a primary source of income in retirement, according to the study, commissioned by the Washington, D.C.-based nonprofit Alliance for Lifetime Income, which advocates for retirement annuities and includes insurers and financial-services companies.
“Social Security was never intended to be the sole source of income later in life,” said Ramsey Alwin, chief executive at the National Council on Aging, which advocates for older peoples’ financial security.
Researchers at Boston College’s Center for Retirement Research, who have studied financial weaknesses among young boomers, said that there are several contributing factors.
A recent study by the nonpartisan Employee Benefit Research Institute suggested people are overly optimistic about how long they can remain on the job. Issues like personal medical problems, partners’ health needs and layoffs are all potential hazards, said Craig Copeland, EBRI’s director of wealth benefits research.