The nation is fast approaching.”Peak 65“With the youngest baby boomers turning 65 this year, beginning the largest wave of retirements in U.S. history. However, most of these Americans are not financially prepared to stop working, and many are at risk of living in poverty, according to a new analysis.
The retirement of the youngest boomers — those born between 1959 and 1965 — will likely reshape the U.S. economy, but not entirely in positive ways, according to a study by the ALI Retirement Income Institute, a nonprofit focused on retirement education.
The new research highlights the impact of income and wealth inequality on a generation that is, at least as a whole, the richest in the country. The study found that boomers who are white, male, or have college degrees are most likely to be financially prepared for retirement, but many people of color, women and those with only a high school education lag behind.
“A majority will find themselves with insufficient resources for retirement, and a large majority either have insufficient resources or are likely to experience significant stress in retirement,” Robert J. Shapiro, co-author of the study and chairman of economic consulting firm Sonecon, told CBS MoneyWatch. “This is not part of the American dream.”
The results reflect other research that has found more… 1 in 4 workers is older They approach retirement without having saved a penny. While many young people have not yet begun investing money for their later years, it is even more concerning for younger boomers who are approaching retirement age since they only have a few years left to soak up the money.
The new study found that about 53% of “boomers,” or the end of the generation who will turn 65 between 2024 and 2030, have assets of less than $250,000. But the study found that there are significant differences between members of the group, based on its analysis of data from the Federal Reserve and the Health and Retirement Study conducted by the University of Michigan.
For example, boomer men have an average retirement balance of $268,745, while women of the same age have savings of just $185,086. Boomers with only a high school diploma have saved an average of $75,300 for retirement, compared to $591,158 for college graduates.
The report noted that many of these boomers will not be able to maintain their standard of living in retirement, and will also likely rely on Social Security as their main source of income. For example, the analysis found that one-third of these young boomers will rely on Social Security benefits for at least 90% of their retirement income when they turn 70.
Social Security is designed to replace only 40% of a person's working income, while benefits average about $23,000 annually – far from enough to provide a comfortable retirement. Additional problems could arise if the Social Security system is not shored up before its trust funds are exhausted in 2033, which could lead to… Overall benefit reductions.
The report noted that the wave of retirement among the younger boomer generation is likely to reshape the economy. Productivity could slow as they exit the labor force, while consumer spending may also suffer as they cut back on spending.
However, the report suggests there may be a silver lining, at least for younger workers. As the last baby boomers retire, Generation X, Millennials, and even younger workers will be able to fill their vacant positions.
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”