Current:Home > reviewsBaby boomers are hitting "peak 65." Two-thirds don't have nearly enough saved for retirement. -WealthSpot
Baby boomers are hitting "peak 65." Two-thirds don't have nearly enough saved for retirement.
View
Date:2025-04-17 17:42:07
The nation is rapidly approaching "peak 65" as younger baby boomers turn 65 this year, initiating the biggest wave of retirements in U.S. history. Yet most of those Americans are financially unprepared to stop working, and many risk living in poverty, according to a new analysis.
The retirements of the youngest boomers — those born between 1959 and 1965 — are likely to reshape the U.S. economy, and not in entirely positive ways, according to the study from the ALI Retirement Income Institute, a non-profit focused on retirement education.
The new research underscores the impact that income and wealth inequality has had on a generation that, at least on aggregate, is the nation's wealthiest. Boomers who are White, male or have college degrees are the most likely to be financially prepared for retirement, but many people of color, women and those with only high school educations are lagging, the study found.
"A majority will find themselves with inadequate resources for retirement, and a large majority will either have inadequate resources or are likely to suffer significant strains in retirement," Robert J. Shapiro, a co-author of the study and the chairman of economic consulting firm Sonecon, told CBS MoneyWatch. "This isn't part of the American dream."
The findings echo other research that has found more than 1 in 4 older workers are nearing retirement without a penny in savings. While many younger people have yet to start putting money for their later years, it's more concerning for younger boomers approaching retirement age given they have only a few years left to sock money away.
About 53% of "peak boomers," or the tail end of the generation who will turn 65 between 2024 and 2030, have less than $250,000 in assets, the new study found. But huge disparities exist between within the group, the study found, based on its analysis of data from the Federal Reserve and the University of Michigan Health and Retirement Study.
For instance, peak boomer men have a median retirement balance of $268,745, while women of the same age have savings of only $185,086. Peak boomers with only a high school degree have saved a median of $75,300 for retirement, compared with $591,158 for college graduates.
Many of those peak boomers will be unable to maintain their standard of living in retirement, and also are likely to be reliant on Social Security as their primary source of income, the report noted. For instance, one-third of these younger boomers will rely on Social Security benefits for at least 90% of their retirement income when they are 70, the analysis found.
Social Security is designed to replace only 40% of a person's working income, while the average benefit is about $23,000 per year — far from enough to provide a comfortable retirement. Additional problems could arise if the Social Security system isn't shored up before its trust funds are slated to be depleted in 2033, which could lead to across-the-board benefit cuts.
The wave of retirements by younger boomers is likely to reshape the economy, the report noted. Productivity could slow as they exit the workforce, while consumer spending could also take a hit as they pare spending.
However, there could be an upside, at least for younger workers, the report notes. With the last of the baby boom generation retiring, Gen X, millennial and even younger workers will be able to fill their vacated jobs.
- In:
- Social Security
Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.
TwitterveryGood! (927)
Related
- A South Texas lawmaker’s 15
- The Best Prime Day Candle Deals: Nest, Yankee Candle, Homesick, and More as Low as $6
- New Study Reveals Arctic Ice, Tracked Both Above and Below, Is Freezing Later
- Washington’s Biggest Clean Energy Lobbying Group Pushes Natural Gas-Friendly Policy
- Head of the Federal Aviation Administration to resign, allowing Trump to pick his successor
- Hey Now, Hilary Duff’s 2 Daughters Are All Grown Up in Sweet Twinning Photo
- Increasingly Large and Intense Wildfires Hinder Western Forests’ Ability to Regenerate
- Treat Williams’ Daughter Pens Gut-Wrenching Tribute to Everwood Actor One Month After His Death
- Who's hosting 'Saturday Night Live' tonight? Musical guest, how to watch Dec. 14 episode
- 3 dead in Serbia after a 2nd deadly storm rips through the Balkans this week
Ranking
- Grammy nominee Teddy Swims on love, growth and embracing change
- Patrick Mahomes Is Throwing a Hail Mary to Fellow Parents of Toddlers
- Why Khloe Kardashian Forgives Tristan Thompson for Multiple Cheating Scandals
- Get a $65 Deal on $212 Worth of Sunscreen: EltaMD, Tula, Supergoop, La Roche-Posay, and More
- Toyota to invest $922 million to build a new paint facility at its Kentucky complex
- A Proposed Utah Railway Could Quadruple Oil Production in the Uinta Basin, if Colorado Communities Don’t Derail the Project
- Texas Gov. Greg Abbott defies Biden administration threat to sue over floating border barriers
- This Dime-Sized Battery Is a Step Toward an EV With a 1,000-Mile Range
Recommendation
Why members of two of EPA's influential science advisory committees were let go
Trader Joe's cookies recalled because they may contain rocks
What Denmark’s North Sea Coast Can Teach Us About the Virtues of Respecting the Planet
Rob Kardashian Makes Subtle Return to The Kardashians in Honor of Daughter Dream
Macy's says employee who allegedly hid $150 million in expenses had no major 'impact'
Yes, a Documentary on Gwyneth Paltrow's Ski Crash Trial Is Really Coming
2023 ESPYS Winners: See the Complete List
20 Top-Rated Deals Under $25 From Amazon Prime Day 2023
Like
- Why Sean "Diddy" Combs Is Being Given a Laptop in Jail Amid Witness Intimidation Fears
- From Gas Wells to Rubber Ducks to Incineration, the Plastics Lifecycle Causes ‘Horrific Harm’ to the Planet and People, Report Shows
- Prigozhin's rebellion undermined Putin's standing among Russian elite, officials say