No one ever said the road to retirement is an easy path traveled, but it’s looking to be a particularly bumpy and pothole-filled road for baby boomers.
The baby boomer generation began retiring earlier this decade, and the expectation is that roughly 10,000 boomers will exit the workforce each day between now and the end of next decade. But for many baby boomers the reality of being able to retire comfortably, and on their own terms, may not be possible. The following five statistics perfectly sum up the woes that many boomers are facing as they approach or enter retirement.
1. 59% relying heavily on Social Security
Arguably one of the biggest challenges baby boomers face is their heavy reliance on Social Security. Based on statistics from the Insured Retirement Institute’s latest report on baby boomers, some 59% of boomers expect Social Security to be a major source of their income during retirement. That’s up from just 43% when surveyed in 2014.
This is particularly worrisome because the Social Security’s Old-Age, Survivors and Disability Insurance Trust isn’t on solid long-term footing. The Board of Trustees is predicting that the OASDI will burn through its remaining cash reserves by 2034 — namely on account of so many boomers retiring and shifting the worker-to-beneficiary ratio from 2.8-to-1 in 2015 to 2.1-to-1 by 2035. While any number of tax increases or benefit cuts could extend benefit payments to eligible seniors via Social Security, a cut of up to 21% could be necessary to sustain the program for generations to come. That’s a scary proposition for nearly 6-in-10 boomers!
2. 45% have no retirement savings
Here’s a terrifying nugget of data to wrap your hands around: based on IRI data, just 55% of respondents in its study had retirement savings in 2016, meaning 45% of baby boomers surveyed had absolutely nothing saved for retirement. Comparably, 80% of respondents in 2014 had money put away toward retirement.
This lack of retirement savings certainly explains why boomers are likely to be more reliant on Social Security income during retirement. However, it’s downright terrifying since it means that nearly half of all boomers have no Plan B when it comes to covering their monthly expenses. All the while, healthcare costs continue to grow at a much faster rate than wages. Not a good combination.
3. 30% postponed their retirement plans
Forgot mimosas on the beach, because the alarm clock is going off and you need to get to work. The IRI report also notes that over the past year some 3-in-10 baby boomers postponed their plans to retire. Age 62 has long been viewed as “retirement” age, but nearly 6-in-10 boomers now expect to retire at age 65 or later, including 26% of boomers that anticipate retirement at age 70 or later. In 2011, just 17% of boomers expected to retire by age 70 or later.
With little to no savings in their coffers, boomers have had little choice but to work longer in order to use their working wages to meet their basic monthly expenses.
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