January 20, 2021, 0 Comments
Are We STILL in a Baby Boomer Retirement Crisis?
Baby Boomers, born between 1946 and 1964, should be enjoying or heading into retirement right now. They worked hard for decades and should be reaping the benefits. However, a significant number of older adults are not prepared for retirement. Insufficient financial resources and uncertainty about job security are areas of substantial concern. Factors such as the 2008 recession, chronic low interest rates, stock market losses due to the coronavirus pandemic, and lack of planning all contributed to the problem. As a result, older adults are working longer to support themselves because they have few other options.
Discover why Baby Boomers still are facing a retirement crisis.
Average Baby Boomer Retirement Savings
According to the 19th Annual Retirement Survey of Workers conducted by the TransAmerica Center for Retirement Studies, Baby Boomers have an average of $152,000 saved for retirement (https://www.transamericacenter.org/retirement-research/19th-annual-retirement-survey). Based on data from the Bureau of Labor Statistics, adults between ages 65 and 74 spend an average of $48,885 annually (https://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm). At this rate, a Baby Boomer’s retirement savings would last approximately three years. For a couple, their savings would last approximately one year. This is not enough to last through retirement.
Stock Market Declines
A significant number of Baby Boomers are short of retirement savings due to the 2008-2009 stock market decline. Many panicked, withdrew from the markets, and missed out on potential gains from the rebound. Boomers who invested in bond funds received low interest rates that produced low yields. With salaries remaining stagnant, increasing retirement savings became extremely difficult. More recently, the coronavirus pandemic caused substantial movements in the stock market, resulting in significant losses and panic selling in February and March 2020. As a result, a substantial number of retirement accounts are nowhere near where they were projected to be.
Lack of Planning
As the first generation to face saving for retirement on their own, there appears to have been a lack of information on the importance of saving early and often. According to the Insured Retirement Institute, 74% of Baby Boomers do not have a backup plan if forced into retirement sooner than expected.
Options for Baby Boomers
Depending on their circumstances and types of assets they can access, Baby Boomers have options when it comes to retirement. Those who own their homes in area with a lower cost of living may be able to live on significantly less than those paying rent in a major metropolitan area. Other options include downsizing a home, moving to a more affordable state, relying on public transportation, or making other lifestyle adjustments.
Hire Seasoned HR Professionals
A significant number of Baby Boomers are facing a retirement crisis. The majority do not have enough assets to last more than a few years. As a result, they have to continue working in order to support themselves.
When you are in the market for an experienced HR professional, get help from Arlington Resources. We are committed to attracting the best-qualified candidates while valuing a diverse workforce. Learn more today.