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BABY BOOMERS AND RETIREMENT

by: Begley Law Group

by Thomas D. Begley, Jr., CELA

Nothing is likely to have greater impact on public policy and programs for the elderly than the aging of the Baby Boomers (“Boomers”). Boomers represent 76 million persons in the United States born between 1946 and 1964 – 31% of the total population. Boomers are divided into two waves. The first wave was born between 1946 and 1954 and is currently between 61 and 69 years of age. The second wave was born between 1955 and 1964 and is currently between 51 and 60 years of age. By the year 2030, all surviving members of this generation will be between the ages of 66 and 84 and 90% will be retired by the year 2030.[1] By 2020, close to one-third of the population will be over age 55. Despite the conventional wisdom that Boomers are ready to “work forever” and significantly extend their formal working career, many of the oldest Boomers are already well into the retirement phase. Many more expect to retire upon becoming eligible for full Social Security Retirement benefits.

  • Forty-five percent of 65-year old Boomers are now fully retired with another 14% reporting that they are retired but working part-time or seasonally.
  • Of those who have not yet retired, 61% plan to retire when they reach 68.5 and are eligible for full Social Security Retirement.
  • Forty-five percent of Boomers who retired earlier than planned cited health-related reasons for doing so. Sixteen percent cited loss of a job or job opportunities. Those who retired later than they had planned mentioned needing a salary to pay for day-to-day expenses.
  • Sixty-three percent of Boomers have started receiving Social Security benefits prior to reaching full retirement age.
  • Seventy percent of retirees report liking retirement “a lot.”
  • Twenty-five percent of Boomers received an inheritance from their parents with an average value, before taxes, of $110,000.

The General Accounting Office (GAO) found that an annual drawdown of savings at an annual rate of 4%, coupled with a delay in Social Security, was a good strategy for Boomers to employ for retirement. The longer Social Security is delayed, the higher the monthly payment. Therefore, drawing down on savings first will ultimately lead to a higher monthly check from the Social Security Administration.

[1] P. Berg & A. Collins, Baby Boomers: Issues and Trends Summary Analysis Including Opportunities for the Aging Network, National Association of Area Agencies on Aging.