What Baby Boomer Retirement Is Looking Like
The first members of the baby boom generation reached the traditional retirement age of 65 in 2011. By 2029, every baby boomer will be 65 or older.
In many ways, their retirement experience will be very different from that of their parents, members of the so-called Greatest Generation. These are some of the key differences:
The likelihood of a longer retirement
Increasing life expectancy has made it likely that baby boomers will spend more time in retirement than their parents did. The average life expectancy for a 65-year-old American today is 18.3 years, 16.9 years for men and 19.6 years for women.10 In other words, a 65-year-old man today can reasonably expect to live to age 82 and a 65-year-old woman to age 85. And many Americans, as we're seeing, now live into their 90s or even 100s.
Greater longevity, coupled with good health and an accommodating job market, also opens up the possibility for baby boomers to remain in the workforce longer. Doing so will not only provide them with more current income and more time to plump up their retirement accounts, but all else being equal it will reduce the period of time that their savings will need to support them.
The decline of traditional pensions
During their working years baby boomers witnessed the decline of traditional defined-benefit pensions, where the employer promises workers a certain amount of regular income upon retirement. The employer was responsible for funding the pension plan as well as choosing and managing its investments. Many of the baby boomers' parents had retired comfortably on such pensions.
In their place came defined-contribution plans, such as 401(k) plans, largely funded by the employees themselves out of each paycheck, often with some form of matching contribution from the employer. Employees were given a choice of investments, such as an assortment of mutual funds, making it their responsibility to contribute enough money and invest it wisely—and it was their tough luck if they failed to do so.
In 1975, 27.2 million private sector workers participated in defined-benefit pension plans. By 2019, that number had dropped to 12.6 million. Meanwhile, the number of defined-contribution plan participants rose from 11.2 million to 85.5 million over that same period.11
The result has not been pretty for a large part of the baby boomer population. As of 2020, only 58.1% of baby boomers between age 56 and 64 had any type of retirement account.12
Among baby boomer households with retirement savings, the Transamerica Center for Retirement Studies estimates their median value at $289,000. The center also reports that 41% of boomers expect their primary source of retirement income will be Social Security benefits.13 That brings us to another important difference.
The likelihood of a longer retirement
Increasing life expectancy has made it likely that baby boomers will spend more time in retirement than their parents did. The average life expectancy for a 65-year-old American today is 18.3 years, 16.9 years for men and 19.6 years for women.10 In other words, a 65-year-old man today can reasonably expect to live to age 82 and a 65-year-old woman to age 85. And many Americans, as we're seeing, now live into their 90s or even 100s.
Greater longevity, coupled with good health and an accommodating job market, also opens up the possibility for baby boomers to remain in the workforce longer. Doing so will not only provide them with more current income and more time to plump up their retirement accounts, but all else being equal it will reduce the period of time that their savings will need to support them.
Who Named the Baby Boom?
The term "baby boom" goes back to at least the years immediately following the First World War, when England apparently experienced one. It began to appear in U.S. newspapers toward the end of World War II and may have been given greater currency when the widely read financial columnist Sylvia Porter used it in a 1950 article on the boom's economic impact. The term "baby boomer" is more recent but also dates back to at least the 1970s. It got a boost in 1980, when author Landon Y. Jones published his bestselling book Great Expectations: America & the Baby Boom Generation, and it has remained with us ever since.
What Are Echo Boomers?
Echo boomers are the children of baby boomers, generally born between 1976 and 2001, a period of rising birth rates.17 In terms of other generations, the earliest echo boomers could be considered members of Gen X, while later ones are either millennials or part of Gen Z.
What Is Generation Jones?
Generation Jones, or GenJones, refers to baby boomers born in the U.S. between 1954 and 1965. The term was coined by the writer Jonathan Pontell, who maintains that these later boomers are different enough from their early boomer counterparts to constitute their own generation.18
The Bottom Line
The generation of baby boomers, now moving into retirement, remains a powerful force in the U.S, economy and will most likely continue to be one for years to come.
