How Did Baby Boomers Not Save Enough For Retirement?

You hear it constantly on the news: Baby Boomers (those born between 1946 to 1964) are very concerned about their retirement. In fact, some are planning to not retire. While some would suggest that they love to keep working and feel more alive because of it, the sad truth is that many of them did not save enough for retirement. It begs the question, how did baby boomers not save enough for retirement?


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Due to the large size of the Baby Boomer generation, many observers felt that their retirement would put a strain on the U.S. entitlement systems (Social Security, Medicare, and Medicaid), and it has, further leading to many not thinking they can retire.

It didn’t help that many Boomers didn’t save enough for retirement along the way. Add in the fact that there have been two major bear markets in the stock market since the year 2000, and these have added to the financial woes of Baby Boomers.

Many Baby Boomers made the mistake of following Wall Street’s age-old advice of buying and holding stocks and bonds, since it had worked so well for so long.

However, when the bear markets due to a credit crisis and the Great Recession took place, this strategy led to many of their retirement accounts and financial assets losing a great deal of value.

Thus, they did not have as much in their retirement accounts as they had expected. In addition, they had lived more liberal lives in the sense that they took more vacations and spent more lavishly than previous generations, leading to further reductions of their accounts.

Plus, the prices of many things have gone up during the last few decades, including food, automobiles, gasoline, medical care, health insurance, property taxes (as property values had gone up until the 2008 Great Recession), etc., and this increased the costs of living to levels Baby Boomers never expected.

Add in the fact that Baby Boomers are the first generation whose life expectancy average is pushing 80 years old, and Baby Boomers are living to lengths much longer than their parents and grandparents did, further adding to their living expenses.

Many financial advisers recommend that they become more proactive in their retirement planning to help ensure that they can keep working at an older age or be able to fully retire at some point. The earlier they start doing this, the more likely they can retire at some point.

This is especially true for those who are in the latter years of the Baby Boomer generation (say, mid-1950s to 1964), as they still have anywhere from five to fifteen years of working left if you consider mid-60s to be the official retirement age.

Those in the earlier part of that generation (1946 to early-1950s) will have to save as much as they can and stay as healthy as possible so they can work beyond the traditional mid-60s if at all possible to accumulate more wealth, while also cutting back on expenses.

All of the above have led to circumstances where many Baby Boomers have not saved enough for retirement. Living expenses have gone up considerably, as have average life expectancies. Add in two bear markets, and the traditional ‘buy and hold’ strategy for stocks and bonds led to substantial drops in valuations in Baby Boomers’ retirement accounts and other financial assets.

Only a focused effort on staying healthy, working as long as possible, and cutting back on expenses as much as possible will enable this generation to live as comfortably as possible, with some of the younger Baby Boomers still having a chance to live a decent retirement.

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