Who Moved The Finish Line? Baby Boomers and Retirement


The baby boomer generation defies any simple description, except to say that it includes the massive number of people born after World War II, between 1946 and 1964, about 25% of the U.S. total population.  As the “boomers” have passed through each stage of life, this demographic juggernaut has had a profound effect on nearly every institution and aspect of our culture. Now the baby boomers are at it again. As the first of the baby boomers enter retirement, it comes as no surprise that the very notion of what it means to retire is being redefined.  With 10,000 boomers turning 65 every day, it appears that the traditional retirement “contract” is in the process of being rewritten.  As one of the first crop of baby boomers, I have a particularly strong interest in trying to understand and prepare for the changes to come.

When I took my first job in the trust and wealth management business, it was still quite common to work with folks who had spent their entire career working for one employer and who could look forward to retiring with a nice pension, health insurance, Social Security and a few dollars on the side in a savings account. There were fewer decisions to be made and the typical employee could expect to stop working on their 65th birthday and live a life of leisure in their “golden years”.

So what happened? Life happened! Career and life “adjustments”, tuition payments, a little bigger house, a bit nicer car, the dream vacation or lake-house and the best of intentions to save more for the future get put on hold.  Then, as we start to make progress, the investments we do have get clobbered by a nasty recession and market downturn.  A recent survey by the Insured Retirement Institute (IRI) found that fewer than 50% of those 55 and older have retirement savings of over $250,000 and that 30% have accumulated less than $100,000.  Unfortunately, few lifestyles will be sustained by Social Security alone.

Much has changed since I began my career in the early 70s. Today, as the baby boom generation prepares for that next phase of life, they face a less certain financial landscape. Loyalty is largely a thing of the past with workers frequently jumping ship for a better opportunity and employers reducing their workforce due to economic conditions or technical advancements.  Few companies today provide their employees with the certainty of a pension at retirement, or even a job for that matter. More and more, employers have shifted the burden of saving for the future to employees who then must develop the knowledge and discipline to save regularly and invest wisely on their own initiative. And, as previously noted, life gets in the way and paychecks get spent or investments don’t perform as expected and so, with retirement looming, the resources available prove inadequate to the need.

Add to the mix the uncertain future solvency of the Social Security system and the increasing cost of health care and a life of leisure begins to look increasingly like a mirage.  All of this is further complicated by the inability of our elected officials to agree on even the most basic corrective measures.

Every day, my inbox is filled with articles and surveys that suggest that many baby boomers are ill-prepared for retirement and may fall short of the life of ease they have been conditioned to expect. The fact is that many will continue to work well beyond the normal retirement years, some because they want to and some because they have to.  Retirement for the baby boom generation will look nothing like that of their parents. Many of my generation will continue to work full or part-time for as long as they are mentally and physically capable to do so. And this trend is beginning to play out in the Department of Labor statistics showing that the labor participation rate of those 65 and older has and will continue to increase steadily in the years ahead. Whether due to financial or psychic reasons, this phenomenon may be expected to change much of the thinking and common wisdom about what “retirement” means.

Over the years, I have assisted many people with their retirement planning. My primary focus has always been on crunching the numbers to determine if a person would have sufficient resources for a secure retirement.  The many variables include, savings rate, return on investments, life expectancy and expected lifestyle, to name a few.  As I approach age 65, I have a growing appreciation for the complexities of “retirement planning” and have found that the issues are not always purely financial. We ask ourselves questions like: What will I do with my spare time? How can I find purpose in my life beyond the office? Can I afford to help my children or grandchildren financially? When will I begin receiving Social Security? How should I invest my retirement savings in a volatile economy? Will I have enough income to sustain a comfortable lifestyle in the years to come?

The baby boomers are again changing the rules that guided previous generations and raising many new questions to ponder.  How will large numbers of older employees staying in the workforce impact the employment prospects for younger generations? How will Social Security be impacted if more seniors stay in the workforce and delay benefits while continuing to pay into the system? How will the investment markets perform if more people continue to work and save rather than cash in their investments as previously forecasted?

I have sought out research that has attempted to answer these questions and found the conclusions to be surprising and more positive than I would have thought. I certainly hope that proves to be the case and will share my discoveries in future blogs. It is clear, however, that the concept of retirement for Baby Boomers is changing and will, as in every stage of life, have a powerful impact on our thinking, our finances and our expectations.