The youngest baby boomers, born in the era that spawned Beatlemania, face a looming retirement crisis, researchers have found.
“Late boomers,” Americans born between 1960 and 1965, have less retirement wealth, and much less retirement savings, than either older boomers or “war babies,” generations born between 1942 and 1959, according to a recent paper from the Center for Retirement Research at Boston College.
To compare wealth, researchers examined different generational groups at the same age range, adjusting for inflation.
A decade ago, at ages 51 to 56, the average “late boomer” had about $280,000 in combined wealth from Social Security, pension benefits and 401(k)-type retirement plans, in inflation-adjusted dollars. The calculation covers households in the middle 20% by wealth.
Earlier generations had more wealth at the same age. The average “mid boomer,” born between 1954 and 1959, had about $332,000 in total retirement wealth. The average “early boomer,” born between 1948 and 1953, had nearly $346,000.
What happened to the retirement savings of Beatlemania-era boomers?
What happened to the retirement savings of the Beatlemania boomers?
Blame the Great Recession, the longest economic downturn since World War II, stretching from late 2007 through mid-2009. Home values plummeted, joblessness soared, and the S&P 500 lost more than half of its value.
The downturn hit when late boomers were in their top earning years, their early to late 40s.
“People are really starting to peak in their careers around that time,” said Evan Potash, executive wealth management advisor at TIAA, the financial services company. “They’re making, potentially, the most amount of money they’re going to make.”
The employment rate for late boomers plummeted in the Great Recession years. The share of young boomers who said they were working declined from 98% at age 44 to 77% at age 50, the researchers found.
At 50, most late boomers should have had at least a decade of work ahead of them. Yet, many in that generation never returned to the job market. By age 57, only 61% of late boomers were working.
That age is “too early for people to retire,” said Anqi Chen, a senior economist at Boston College and co-author of the paper. “Even for those who did keep their jobs, their earnings were a lot lower.”
Average earnings for the youngest boomers dipped from about $79,000 at age 44 to $69,000 at 47, among households in the middle quintile of wealth.