Are baby boomer retirements doomed? I fear the answer for millions of people is a resounding “Yes”.
According to the US Census, there are almost 80 Million Baby Boomers living in The United States. I’m proud to call myself one (though my 1963 birth means I barely squeaked into the 1946 – 1964 timeframe).
Baby boomers are now retiring at the rate of ~10,000 per day.
That’s a LOT of folks heading into retirement.
Are Baby Boomers Ready For Retirement?
I read two very concerning studies this week, one from GoBankingRates and the other from the United States Government Accountability Office (GAO). Both focus on baby boomers’ readiness for retirement, which is the focus of today’s article. The GoBankingRates study asked each of three age groups (Millennials, Gen Xers, and Baby Boomers) the following question:
“By your best estimate, how much money do you have saved for retirement?”
The results are startling, and summarized by the following graphic from the study:
Look at those numbers again:56% of Americans Have $10k Or Less Saved For Retirement! Click To Tweet
Obviously, the data above is for all age groups, so it’s influenced a bit by the “younger crowd”. Let’s look at Baby Boomers specifically:
How Much Do Baby Boomers Have Saved For Retirement?
Fortunately, the study breaks the data down by demographics. While it’s “better” for “Baby Boomers/Seniors”, it’s still cause for serious alarm:
Among those Ages 55+, there’s still a tremendous gap in what folks have saved for retirement, and what they’ll actually need to retire:Of Folks Ages 55 or Older, 45% have less than $10k saved for retirement (!!!) Click To Tweet
Further, 28% of Baby Boomers have NOTHING saved for retirement. That’s ~22 MILLION people, over the age of 55, who have nothing saved for retirement. While some of those folks may be the lucky few who can count on a pension, many will be destined for a life funded soley by Social Security. In fact, 35% of Baby Boomers expect Social Security will be their primary source of retirement income.
Scary stuff, this.
75% Of Those Over 40 Are Behind
Using benchmark targets from JP Morgan, the GoBankingRates study concludes that 3 out of 4 folks approaching retirement are behind on their retirement savings vs. where they need to be. A concerning reality, and one which folks will be facing in the very near future as they approach retirement age and may be forced to retire sooner than they think. If you lose your job, and are unable to fund your retirement, you’ll likely be left with a life in pursuit of low paying jobs. Forever.The reality is, many Baby Boomers will never be able to retire. Click To Tweet
If you’ve procrastinated on making retirement savings a priority, you’re very quickly facing the day when you’ll have to pay for this mistake. I feel for the majority of Americans who are unprepared for retirement, and worry about what the balance of their lives have in store for them.
There’s an older lady who works at the drive-thru of our local Wendy’s. My wife and I ask ourselves how old she is whenever we go through that drive through, and have agreed she’s likely in her late 70’s, maybe even 80. She’s always pleasant, and we’ve commented to each other that she’s probably their best employee. It makes me sad to think that she’s stuck working a minimum wage job at such a late stage in her life.
I suspect there will be many more like her in the coming years.
What I Would Do If I Were Behind
Fortunately, my wife and I have made it a priority to save for retirement since our 20’s, and we’re in good shape. I suspect most of you reading this are also in better shape than “average”. Perhaps you know some folks who fall into the scenario depicted by these studies. What can they do? Here’s what I would do if I were in their shoes:
1. Get Very Serious, Very Fast
Realize that your working days are numbered, and no one cares about you as much as you do. This is on you. Own it, and admit you’ve procrastinated for too long. Commit to take action, and start today.
2. Sacrifice Like There’s No Tomorrow
Unless you want to be that 80 year old woman working at Wendy’s, it’s time to sacrifice now. Sucks, don’t it? Get over it, and start sacrificing today. Either way, you’re going to have to sacrifice. Better to sacrifice some today, rather than push all of your sacrifice to tomorrow (Wendy’s). Cut off your land line. Kill the cable. Sell the new car and buy an old clunker. Sell your house and move into something smaller/cheaper. Get a roommate. Stop eating out. Cut off all funding to your children. If you have a problem with credit cards, put them in a bowl of water and throw them in the freezer (better yet, cut them up). Tough decisions, all, but the reality is that you’re very quickly running out of choices. It’s time to face reality, as ugly as it may be.
3. Adjust Your Expectations
Realize that if you’re behind in your 50’s, you’re likely behind for life. Forget about retiring to a life of leisure, and look for additional sources of income that you can build in the event you lose your job. Drive for Uber if you must, but find something now that can generate some additional income. Save every extra dime you earn. Leisure is likely an unrealistic expectation at this point in your life, so double down and commit those leisure hours to earning some extra money. Now. Mentally prepare yourself for the reality that you’ll probably be working for many more years, and you’ll likely never be able to retire. Unpleasant, but it’s important that you take off the rose colored glasses and peer cleary into the reality that you’re facing.
A life of procrastination is catching up to you. Fast.
4. Live Like You’re On Social Security
Get your updated Social Security estimates here, then try to build a budget using those income estimates. Be prepared – it’ll be an ugly, ugly scenario. How am I supposed to live on $1,500 a month??!! Better to face the reality now while you can still do something about it, than to lose your job next month and have to face it unprepared. If nothing else, it’ll be a wakeup call to how serious your situation is.
It is serious.
Recognize the fact, and make radical changes today.
Today’s post was painful to write. However, the facts are the facts, and there are millions of baby boomers rapidly approaching a point where they’ll have to face a very ugly reality. I have sincere empathy for folks who are unprepared for retirement. Consider this a cold, hard slap in the face to “Wake Up!!”. Better to read these words today, while you can still do something about it, than to continue to procrastinate and make matters worse.
It’s your choice, and only you can make it.
You can choose to continue to ignore reality, but don’t be surprised if you end up as that 80 year old working at Wendy’s.
As much as it hurts, face up to the fact that it’s time to Deal With It.
Today’s the day to Deal With It. So….Deal With It.