Millennials aren’t the only ones unprepared for retirement. A significant amount of Baby Boomers, are finding themselves far from retirement-ready.
According to a recent article in the Wall Street Journal, Baby Boomers are reaching retirement age in worse financial shape than the prior generation for the first time since the post-Great Depression era.
What’s keeping them from retiring?
There are many reasons that Baby Boomers are staying in the workforce instead of retiring, including:
- Large amounts of debt
- Continuing to support their adult children
- Caring for their aging parents and relatives
- Stagnating income, Social Security, and retirement-fund returns
In fact, the Wall Street Journal found that more than 40% of Baby Boomer households (about 15 million American households) lack sufficient resources to maintain their current standard of living in retirement.
How Baby Boomers compare to the other generations.
While it may seem that Millennials are the only generation with massive debt in the form of student loans and credit cards, New York Federal Reserve data shows that Americans aged 60 to 69 had:
- $2 trillion in debt in 2017— an 11% increase from 2004..
- $168 billion in outstanding car loans in 2017—25% more than 2004
- 6 times as much student-loan debt in 2017 than they did in 2004.
Unlike Millennials, who can respond to financial instability by pushing back major life events, like buying homes and having children, Baby Boomers don’t have as many options. This is especially true when it comes to health care.
What will the future hold for Baby Boomers?
As Baby Boomers age, they will inevitably require more health care—and the costs are rising exponentially. Nearly half of workers surveyed last June by the Employee Benefit Research Institute said their health care costs increased over the prior year, causing more than a quarter to cut back on retirement savings, and nearly half to reduce other savings.
Will Gen X and Millennials find themselves in the same boat when it’s their turn to start planning for retirement? Perhaps seeing Baby Boomers going through this hardship will inspire them to revitalize their retirement plans now, before it’s too late.
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