- Baby Boomers are living longer — and it’s creating retirement challenges.
- Living longer means Boomers now either have to work longer to support themselves or have to worry about outliving their savings.
- Unfortunately, working longer is not an option for many.
Baby Boomers are living longer, and it’s giving them anxiety about retirement.
Although people say they’re the happiest when they get older, Baby Boomers are living so long that many now have to work longer to support themselves — or worry about outliving their savings.
Just 23% of Baby Boomers think their savings will last through retirement or that they have done a good job preparing for retirement, according to a survey by the Insured Retirement Institute, a trade association for the retirement industry, from earlier this year. Only 54% had any retirement savings at all, and only 40% tried to calculate how much money they would need to retire.
The survey also found that about 60% of boomers think their retirement income will cover basic expenses and leave some extra for travel and fun — which is the kind of thinking that could possibly lead boomers to run out of money.
Some are working longer, but that’s not an option for everyone
Some Americans are working around this problem by staying employed far into their 70s, at least in part-time positions. However, working longer is not a realistic option for every person approaching the traditional retirement age.
The job market is in the middle of a transition period in which many roles are being automated, especially in manufacturing firms. For those who lose their jobs at an older age, it is not always easy to learn new skills or return to school. Physically demanding jobs, meanwhile, are often difficult for older workers, even if those jobs are not going away.
And so, people who plan to retire in their mid-60s to early 70s need to have to have enough money saved up for another decade or two.
Longevity is “one of the greatest financial challenges faced by our clients today,” Larry Fink, CEO and chairman of BlackRock, said earlier this year in his annual letter to shareholders.
The longevity problem is an underappreciated contributor to Americans’ financial anxieties right now, he added. Not only are people having trouble finding jobs as the economy changes, but they also don’t have retirement security to support their futures.
Not just a problem in the US, however
Crucially, this isn’t just a problem in the US, and it’s not even a new issue. Fewer children are being born compared to the number of elderly adults in the world, something economists have observed for a while now.
And within a few years, just before 2020, elderly adults will begin to outnumber young children, according to a projection by the US Census Bureau.
This trend is likely to continue in the future. The Census Bureau estimates that by 2050 those aged 65 and up will make up an estimated 15.6% of the global population — more than double that of children aged 5 and under, who will make up an estimated 7.2%.
If these projections hold, there will be far more older residents entering retirement with far fewer working-age citizens around to support them — which could add another wrinkle to the longevity problem.
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