Huge gap in Baby Boomers' retirement savings

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This is a companion post to the one published by DCG this morning on more California seniors are working full-time into their late 60s and early 70s.
The reason for that is very simple: Most “baby boomers” in America have not saved, which means they must work even when they reach the standard retirement age.
Baby boomers are people born between the years 1946 and 1964, during the demographic post–World War II baby boom. In 2015, if your age is between 50 and 69, you are a boomer.
Kate Davidson reports for the Wall Street Journal, Oct. 26, 2015, that a new survey from BlackRock, the New York-based multinational investment management corporation and the world’s largest asset manager, found that there is huge “retirement gap” — the gap between Americans’ retirement expectations and how much they actually have in savings.
Fewer than a quarter (less than 25%) of Americans regularly set aside money into long-term savings or investment plans—yet 74% said they feel financially secure and “prepared to pursue their dreams.”
Put bluntly, many Americans are deluding themselves about being able to retire comfortably, or to retire at all.
Baby boomers, in particular, who are retiring in droves, face a staggering shortfall. People ages 55 to 64 who responded to BlackRock’s online survey say they expect to have about $45,000 in annual income in retirement. But the amount they have actually saved would only provide an estimated $9,129—a potential $36,371 gap.
Baby Boomers' retirement income gap
Here’s the breakdown of baby boomers into various groups:

  • Even “affluent” boomer retirees—those earning more than $250,000 a year—had not set aside enough to generate the income they say they would need to meet their retirement expectations. The “affluent” expect an annual retirement income of $60,000, but their actual savings would provide an actual retirement income of about $38,000 a year, leaving a retirement gap of $22,000.
  • “Nonaffluent” boomers — those earning less than $250,000 — are in a much worse strait. They expect an annual retirement income of almost $40,000, but their actual savings could provide an actual retirement income of $4,000 a year — a retirement gap of $36,000.
  • Although women expect a little less in retirement income than men, women also have a bigger retirement gap than men: $37,000 vs. $36,000.

BlackRock’s global chief investment strategist Russ Koesterich warns us that “The amount of money you need to generate a certain level of income is a lot higher than it used to be” because interest rates are so low. As a result, even if an investor has saved diligently for decades, the amount that a nest egg can generate is much smaller, which has come as “a very unpleasant surprise” to retirees.
Interest rates are near zero because the Federal Reserve is keeping them low. As things are, much of the federal government’s spending goes to paying the interest on America’s astronomical and ever-expanding national debt. Higher interest rates will mean an even bigger national debt.
The BlackRock survey polled 4,213 Americans out of more than 30,000 people around the world.
Nearly four in 10 people surveyed said they want to make sure they have enough cash saved as a security blanket for an emergency before they save for retirement. And the vast majority said they find it difficult to keep up with bills and save for retirement at the same time.
That squares with other recent data from U.S. Financial Diaries, a project of the New York University Financial Access Initiative and Center for Financial Services Innovation, which found many households are saving regularly for small, short-term emergencies, such as an unexpected dip in income or a spike in expenses. But those emergencies happen so often it prevents them from building up larger amounts to put toward long-term goals.
In an environment where cash is paying nothing, and bond yields are well below where they were for the past 40 or 50 years, Koesterich argued younger workers will need to embrace the volatility of the stock market if they want to generate the returns they need to live comfortably for decades in retirement.
What Koesterich and Wall St. Journal left out is another reason why Americans are finding it difficult to save in the amounts they should:

Taxes

Under the Obama administration, the federal government is hauling in more money in taxes than ever before. Tax revenue is at an all-time high: Over $2.67 trillion has come in so far this fiscal year, according to the latest Treasury Department report. That’s a record — in dollar terms — for the first 10 months of the year (the government’s fiscal year ends in September). Expect 2015 to finish at an all-time high. (CNN Money)
Despite record tax revenue, the Obama administration keeps spending more and is accumulating ever more debt, which will have to be repaid by the baby boomers’ children, grandchildren, and great grandchildren.
~Eowyn

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0 responses to “Huge gap in Baby Boomers' retirement savings

  1. 1. Obama is deliberately bringing senior citizen immigrants to this country and placing them on Social Security. This program is nothing less than an act of genocide against the mostly white skinned baby boomer generation. 2. H 1 B Visa workers (sic) in this country are encouraged to bring relatives along with so they can feel comfortable. These relatives are always senior who go right on Social Security without putting a thin dime into the system. 3. A black male is 10X more likely, a brown male is 4X more likely to have AIDS than a white male. Soon as they have AIDS they go on Social Security, draining $618,000.00 from the trust fund before they meet their maker (Freddy Mercury). Baby Boomers are not the problem. The problem is Washington’s effort to exterminate whites.

     
  2. My children have cashed in their 401K’s.
    I did some side work to make ends meet in 2014 and the
    IRS pounded me for $1000 in taxes and another $50 in penalties.
    A lot of folks (not me) are hunting to eat and chopping wood for heat.
    This is how The Federal government is destroying the middle class.

     
  3. I retired in ’08 and according to this article should be in poor house and on welfare, medicaid, etc. However, I am not and just spent $100 at the grocery store yesterday. Years ago that was two-weeks of groceries, not just one trip to the store, like yesterday. Of course, we live like no one else so we can live like no one else, but at least we have absolutely no money worries. When I retired we had no savings, the first few years were rough due to my husband’s medical expenses, but we made it and now, until the economy goes bust for all, we are very very comfortably fixed. We still work because we manage a farm enterprise. This allows us to live free of any debt or monthly expenses with the exception of our electrical useage. According to this article we should not be in the abundance of freedom from financial worries that we are experiencing. Life is wonderful when you are debt FREE! If anyone wants to truely retire, I believe they can. There are plenty of oportunities you just have to be open to all possibilities. Thank you Lord. Now would you please come quickly!

     
    • “I retired in ’08 and according to this article should be in poor house and on welfare, medicaid, etc. “
      I’m sorry, MA, but where did you get that from my post?
      It’s great that you are working although you are supposedly “retired” — working is good for your health, spirit, and pocketbook. 🙂

       
  4. No surprises here, are there? As I near 73, destined to continue working in my very shrunken residential improvement business, I cannot rely on gubbmint assistance as my mainstay, although it does help in a major way, in that it’s reliable.
    And, alhough the spirit is willing, the flesh weakens, even if people tell me I look fifteen years younger! Because I learned long ago that it’s not the age, but the mileage.
    I’ve been around the block many times –for which I’m grateful– and my guardian angels have given me nine lives, but I never rely on these as a given: it’s all grace, not of my doing, so I’m ready to go home at anytime.

     
  5. Some of us work because it’s far better to have a purpose in life, a reason to get up in the morning, and the extra income added to SS certainly allows us to live better than we ever did when we were raising our family. It enables us to help our kids and be generous to our grandchildren. My husband feels mentally healthier and happier to continue working, which provides health insurance to bridge the gap in Medicare coverage. We are able to give more to our church, and to charities which is an added bonus. We know the day will come when he will stop working, but God willing, he intends to work well into his 70’s. We don’t have a savings account. We use what we have to live as well as we can, share it with our family and pay our bills on time without struggling too much. We are not wealthy, but merely ordinary middle class people grateful that finally we are not borrowing from Peter to pay Paul, juggling tuition, mortgage, car payments, etc., and hoping for a little left at the end of the month to for a new jacket for this one, or a pair of shoes for that one, or some oil in the tank. We are enjoying this time, however brief it may be, and as my father used to say, they don’t put pockets in your shroud. Working is good for the soul, and we are very blessed.

     
  6. Must be nice to save money. I had a savings account about 10 years ago,but it’s gone. I think you’re right,Katrina,working helps keep us healthy and slows the aging process. Seems like the majority of people I’ve known who retired seemed to age faster,were ill more often and lived much more passive lives than when they worked. Those factors all work together to take a person down faster once they retire. I’m not employed anymore,but I stay busy. BTW-Anyone who thinks surviving on Disability is an ongoing vacation from work-they’re dead wrong. I don’t have to worry about wasting away on Disability-I stay busier now than I EVER did when I worked. See,all my friends and family figure I don’t have anything to do all day,so I’m often called on to run errands,fix things,start/repair their vehicles,haul or tow vehicles or trailers,pick things up or drop things off,and there’s the occasional road trip,to help with driving or Security chores,etc. If I charged for my time,I could easily pay my bills,but they’re FAMILY,and I ALWAYS help family,it’s my JOB. It’s part of what keeps me ALIVE.

     
  7. Truckjunkie, my dad did what you are doing. Disability is no vacation, and it’s certainly never enough to get by on, and thankfully we were eight kids in the family and we helped out, and my mom went back to work in her 60’s. That left my dad to run the house, shop, prepare meals, do errands for family, friends and neighbors. He was always busy with one thing or another, and took up painting as a hobby, letter writing, which become sort of an avocation, and his ever-present NY Times crosswords (the only reason he ever bought the Times) and golf when he could manage it, thanks to his disability pass. Lived life to the fullest with no money to speak of. Took a nap one day and went “home” without any fuss or bother, and left such an enormous whole in the fabric of our family that it could never be filled. He possessed riches that most rich people no nothing about. May God bless you as live a fulfilling and meaningful life.

     
  8. Sorry, meant to say “know nothing about”

     
  9. You must forgive me for asking this question but I am unclear on the concept of Social Security Disability, for I am baffled how someone on disability manages to be “busier than ever…run errands,fix things,start/repair their vehicles,haul or tow vehicles or trailers,pick things up or drop things off,and there’s the occasional road trip,to help with driving” or “run the house, shop, prepare meals, do errands for family, friends and neighbors…always busy with one thing or another, and took up painting as a hobby…and golf”?
    What kind of disability may I ask enables one to do all the above, but not to work?

     
  10. If you have never known anyone who has had, beginning at the age of 51, strokes, or series of strokes, massive heart attacks, lymphoma, and top it off with a quadruple bypass and an aortic aneurysm repair, but gets up despite his disabilities, to make what remains of his life meaningful then you couldn’t possibly understand. The fact the someone is no longer employable due to multiple disabilities and ill health does not preclude them from doing what they can to be productive human beings. Don’t worry. He wasn’t ripping off the system, or somehow taking advantage of the taxpayer. He worked like a dog his entire life, two jobs for many of those years. Some people just can’t exist sitting in a chair feeling sorry for themselves. Fear not, he didn’t stop working until 62, and he only lived to 68, full of cancer, because his health was so poor that not one doctor would attempt surgery, much less chemotherapy or radiation, so he really didn’t get that disability check for very many years, lest you think he was getting more than was coming to him. He was a devout Catholic, and a conservative republican all his life and what you are insinuating is the very antithesis of how he conducted his life. And I am sorry, but why would I forgive you? Your insinuation is obvious, and unforgivable, since you know not whereof you speak. BTW, you have combined the activities of two different people here as though the were one and the same. Forgive me, but it sounds as if you haven’t faced much hard diversity in life, much less faced it with such determination to give to others when there wasn’t much to give but your heart and soul. And let me apologize for those few days during his illness, when he could physically manage it to play a few holes of golf, as that seems to really stick in your craw.

     
  11. Meant to day adversity, not diversity…..obviously.

     
  12. The question was asked in such a sarcastic, snarky manner that the insinuation was blatantly obvious. And so, sorry, Dr., I was compelled to answer in a similar manner. Sorry if that offends you and others. There are actually people who deserved SS disability, and thanks, I’m fully aware of the facts which you provided in order to educate me. Perhaps it has not occurred to some people that someone might hate the situation they find themselves in, and rail against it, and therefore push themselves beyond their limits to do something and be something, to make themselves useful, and not just figure life is over for them because they are ill. I guess that is, in the minds of many, what he should have done. He is dead over 20 years, and maybe I’m ridiculous for defending him, it was long ago, but neither you, nor others knew him, how he struggled, and never gave up. I don’t know why I am even bothering. Now, go ahead, and give me a few good thumbs down. Wouldn’t want anyone to respond with an iota of understanding or compassion. I saw which was the roof was leaking when I got put in my place for defending the Jewish people here not so long ago.

     
    • katrina,
      You already made your point. Why do you find it necessary to belabor this and sputter with outrage all over again? So nobody can ask a question? If I was asked that question — a question that every taxpayer has every right to ask — I would simply respond by calmly describing my father’s disability and how it prevents him from working a job. HuntingForOrcs isn’t disputing your explanation, is he? Just what does it take for you to give this a rest?

       
  13. This illegal administration is milking you from the front door and the back door. You’re going to be left dry under the negro communist.
    Taking record tax revenue (mostly all illegal) yet creating the highest debt than all previous presidents COMBINED!!
    You know Negroes can’t do math do you?? Just thought I’d let you know.

     
  14. I’d like to throw my 2 cents worth in here. I COULD work,for a while. See,all the time I was in the workforce,I saw myself as a loser-I only had two jobs in my life that lasted over a year,and BOTH of them involved working for friends I’d known for 20 years,who “covered me”. Both of these people knew what my limits were and knew something of how to keep me going,but neither could offer me a chance to advance to a higher paying position,so I stuck with the low pay for as long as I could,for the “security”. I took on different kinds of work that paid better,but couldn’t keep a job for long. Felt like I was ALWAYS looking for work. I did the best I could,but after a couple of weeks,or a month,or three or four months,I was always looking for a job again. It wasn’t until I was in Idaho,between jobs (What else is new?) that I started looking at WHY I lost jobs,and noticed the trouble always happened after a low blood glucose episode or an asthma attack,when the Ambulance was called. As I tracked it back,a health emergency was the reason I lost nearly ALL the jobs. Of course,employers CAN’T get rid of an employee for that reason,(THAT would be illegal!) so there were other reasons listed on the documents,usually something like,”Was unable to do the required jobs”,even though I was good enough,in many cases,to train others to do the jobs. What it boiled down to was that,while I could do good work,it was often the stress of trying to comply with an employer’s schedule,and their overly-complicated ways of doing things,and their unwillingness to allow me some leeway in getting my job done was causing some of my medical problems. A Woman at a Temp Agency told me I might be better off on SSD if I could get it;I’d told her of some of the Asthma attacks and Hypoglycemia attacks I’d survived on different jobs,and she feared if I kept working it’d eventually kill me,and that had crossed MY mind as well. I talked to a woman at Social Security up there,showed her my documentation,and showed her how my work history and my medical history related. She took copies and said she’d call ,e when she’d done some research. Social security ran me through all the tests,examinations and interviews related to Disability and after all was said and done,they ruled that I’m “Chronically Unemployable” because my combination of Diabetes and Asthma (In ’01 my Dr. diagnosed that I have Brittle Diabetes and also Emphysema.) would make it unlikely I could ever be considered a “reliable employee”. So I COULD take a job,until my blood glucose jumps off the scale or my Asthma flairs up and I can’t breathe. For some reason,employers prefer not to hire a 61 year old with health risks,and if I’m working at my own jobs and feel under the weather,it’s no problem if I stay home until I’m up to working again. All the people I deal with now understand that,if I say,”I need to have lunch.”,that means NOW,and whatever we’re doing just has to wait for a half hour,or if I,or THEY,hear a wheeze in my breathing,that’s the end of the work day. Yeah-I do a lot of things,the big difference is,if I catch a cold,I can just table everything and stay in the house until I’m over it. No more working until the ambulance gets there then losing another job for my loyalty.
    Okay-it’s ALL yours!

     
    • I totally understand truckjunkie. My husband has the same issues but for different health reasons. We are just very fortunate to have found a way to live very very comfortably for little to no monetary outlay. There are plenty of these types of opportunity, a person just has to look for them.

       
    • Thank you for your detailed explanation, truck, from which I gather that it’s not that you are so disabled as to not be able to work. Rather, it is that your health issues create problems at work which, according to Social Security, render you “unemployable.” It’s an important distinction. That would explain how you are able to do all the many things you do for yourself, family, and friends, despite being on SS Disability.
      I hope that without the job stress, you are better able to manage your asthma and diabetes.

       

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