5 Reasons You Need to Rethink Baby Boomers Retiring

 In Retirement

baby boomers retiring

If you thought that baby boomers would continue retiring at their current rate, you might be surprised to know that it is already slowing. In fact, it would be wise to rethink everything you thought you knew about baby boomers retiring.

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Longer Life Spans

When you think of baby boomers retiring, you probably think about how they leave their jobs for good at 65. As it turns out, though, this may be a bit of an antiquated notion seeing as how healthy lifestyles and advantages in healthcare have improved life expectancy significantly. This, in turn, offsets when people are going to retire.

Amongst other things, having a longer life to look forward to and being more physically active during this time has meant that many baby boomers actually don’t care to retire. As Nancy Collamer over at MyLifestyleCareer pointed out:

“…an increasing number of boomers say they really want to work in retirement. In fact according to, The “Work in Retirement: Myths and Motivations” study sponsored by Age Wave and Merrill Lynch Global Wealth Management, 72% of pre-retirees age 50+ now say that their ideal retirement includes work in some capacity.

An AARP survey called “Staying Ahead of the Curve: The AARP Work and Career Study” found that about a third of retirement-age people said they worked because they enjoyed it – a percentage that is roughly the same as those who said they had to work for financial reasons. This desire to extend our working years should come as no great surprise at a time when a 65-year-old man can expect to live, on average, until 84.5 years old, and a woman of the same age until 86.8 years old.”

Another great perspective on this issue comes from Paul Irving, the editor of The Upside of Aging and President of the Milken Institute. In this book, Irving elaborates on the unprecedented effects that a longer lifespan and willingness to continue working will have on the entire world.

Low Retirement Savings

Did you know the average American couple only has $5,000 set aside for retirement? Worse still, one-in-three have saved nothing for their retirement.

If you’re a regular reader, you know I’ve brought this up before. People habitually misjudge how much they need to retire.

Far too many people don’t understand the importance of using the asset dedication approach to investing. They rely too much on stocks but never put any money into investment-grade, high-quality corporate bonds.

As a result, the chances of baby boomers retiring on time are becoming more and more unlikely. Simply put, the vast majority of them won’t have enough money. Many will not be able to afford retirement at all.

When it comes to couples in their late 50s and 60s, those nearing retirement, the median only has $17,000 set aside in some kind of savings account (e.g. a 401(k)). That’s just the median, though, and that’s definitely not a lot of money to live off of.

Now, some of you might be wondering about pension programs or Social Security. Surely those will help out, right?

Well, actually…
retirement accounts 401K IRA

Eroded Pension System

Social Security is no longer a certainty. Most people understand that to some degree, and it makes sense that this one-time sure-thing is now keeping baby boomers from retiring when they had planned.

There’s also plenty of talk about Social Security getting adjusted or changing the age of retirement to 67 or 70.

In any case, to make matters much, much worse, the pension system is also not holding up like we had once hoped. In fact, back in the 80s and 90s, when American companies started switching from traditional pensions to self-directed plans, many assumed this was going to go a long way toward freeing employees from having to rely on their employers for retirement savings.

That was roughly 30 years ago and, as we just covered, the results haven’t been very inspiring. To be blunt, most pensions will have little to no effect on baby boomers retiring. They’re largely a non-factor.

Of course, they’re also largely non-existent. Fewer and fewer people retiring even have a pension to call upon, much less one that has sufficient funds.

Low-interest Rate Environment

Dropping interest rates have a number of effects on the economy. To some people, it’s a blessing. It means they can purchase their first house for a lot less than it would have cost years earlier.

Unfortunately, low-interest rates hit baby boomers the hardest. They even spell trouble for those who have been saving their entire lives and are now set to retire. That’s because low-interest rates will lower their returns.

If that wasn’t bad enough, baby boomers who are retiring would also have to spend a lot more money in the future. Their retirements will literally cost more than they had anticipated, so they may find that their once-substantial savings are no longer enough.

Once you retire, you stop bringing in money. Aside from your investments and any of the aforementioned vehicles, you’re constantly spending money to continue in retirement.

Furthermore, this lack of resources also makes retirees more vulnerable to changes in the market because they lack a reliable stream of income to fall back on.

Gig Economy

The gig economy continues to grow. If you’re not familiar with the concept, it refers to a culture of freelancers who work for several different organizations throughout the year. It’s also a reference to a new kind of economy whereby more and more companies are beginning to outsource projects to certain freelancers.

While this isn’t something that’s necessarily new, most people who know about the gig economy have no idea that it’s actually affecting baby boomers retiring. The majority of people think about young Uber drivers and individuals putting their spare rooms up on Airbnb. Others may actually know a young person who does copywriting on the side or does graphic design.

However, the gig economy may actually be better for baby boomers. First, for baby boomers retiring despite their money problems, this becomes the ideal way to pad their savings. While they continue to work their full-time gig they can pick up extra hours throughout the week.

For many baby boomers, retiring may take on a very different meaning because of their lack of savings. Instead of fully retiring, they may instead decide to work a part-time job. Thanks to the gig economy, this isn’t just possible; it’s actually easy to do. Many will even be able to use their previous skill set.

This new approach to baby boomers retiring has been coined “unretirement” by many. While it may not be what everyone had in mind, it’s a reality that will change the way baby boomers live during their Golden Years.

As you can see, we live in unpredictable times. Many people may not be able to retire at all, but most will, at the very least, need to adjust their expectations.

Be sure you make the most of this information, so you can prepare yourself accordingly.
saving for retirement

Sergey Sanko
Sergey had started an IncomeClub after years of being an investment advisor for high affluent investors and managing fixed income securities. He is the lead investment advisor representative and holds a Series 65 license. Sergey earned his Executive MBA degree from Antwerp Management School.
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