For the first time in ages, writes a recent Bloomberg article, the next wave of retirees is expected to face a worse financial situation than the current generation.
“Baby boomers are the first generation without the safety net of pensions and other benefits their parents have,” Alicia Munnell, director of the Center for Retirement Research at Boston College, tells Bloomberg. “They’re facing a much more challenging old age.”
The article profiles 87-year-old Lew Manchester and his boomer daughter, 61-year-old Lee Manchester. While Lew’s monthly Social Security payments and two pension checks—totaling more than $3,500—give him ample ability to travel the world and comfortably enjoy retirement, Lee makes $13.50 an hour and rents a friend’s basement to live in.
Lew also has more than $800,000 in savings and a long-term care insurance policy, compared to the $120,000 his daughter has saved for retirement in her 401(k).
The wealth disparity between Lew and his daughter Lee is “emblematic of a broad shift occurring across the country,” the article says, although it adds that there are still plenty of boomers who are wealthy, and older retirees who are not.
“A rising tide of graying baby boomers is less secure financially and has a lower standard of living than their aged parents,” says Bloomberg.
U.S. households headed by boomers between the ages of 55 and 64 have a median net worth of nearly $144,000—almost 8% lower than the median net worth of households headed by those aged 75-plus, according to data from the Census Bureau.
Reasons for lesser net worth include higher losses compared to other age groups in the stock market and housing market bust, along with job losses attributed to the Great Recession when their careers were at a peak in terms of earnings.
With a median 401(k) balance of around $120,000 for households headed by boomers across the country, according to a 2011 study by the Center for Retirement Research, many in that generation indicate they are expecting their standard of living in retirement to be “somewhat” or “much worse than” their parents’ standard, says an AARP Public Policy Institute survey.
Read the full article at Bloomberg.
Written by Alyssa Gerace