Tail-End Baby Boomers Lag Their Elders in Retirement Savings, Says Report

Those born in the last third of the Baby Boom generation—1946-1964—are now moving into retirement but they are doing so less financially well off than those born in the first two thirds, a report from the Center for Retirement Research says.

It called that finding “surprising” given that late Boomers had 401(k)-type investing available to them for nearly their entire careers where those older in their generational cohort didn’t. Increased savings in such accounts had been expected to offset the impact of increasing the age at which unreduced Social Security benefits can be drawn, which hit the youngest portion the hardest, it said.

“Late Boomers were not always behind in private retirement savings. In fact, until their mid-40s, Late Boomers held more 401(k)/ IRA assets than earlier cohorts at the same age. Thereafter, however, that pattern changed abruptly; growth ceased and average assets actually dropped,” it said.

One factor, it said, was that “the Late Boomers were in their 40s during the Great Recession, and this economic calamity appears to have hit them particularly hard. Their employment rate – that is, the percentage of individuals working – dropped sharply. More importantly, the percentage of the cohort working did not rebound as the economy recovered.”

That left many Late Boomers permanently unemployed, unable to invest further for retirement and in some cases needing to drain what they had, it said.

However, “Even among working households, the Great Recession appears to have taken a greater toll on Late Boomers than on earlier cohorts. When Late Boomers reached their 40s, their average earnings flattened out and then declined continuously thereafter, leaving them in their 50s with earnings generally well below those of Early and Mid Boomers.”

It added though, that the pattern of declining wealth in retirement won’t necessarily continue for Generation X, the oldest of whom are now following the Boomers into retirement. “To the extent that the decline in wealth is a Great Recession story, some of the downward pressure on wealth holdings should abate,” it said.