Boomers have always been proud of how they redefined many aspects of American culture. However, there’s one thing they can’t change: the inevitability of aging and death. A recent study from the Stanford Center on Longevity, says that workers approaching retirement will either need to work past age 65, reduce their standard of living or some combination of the two.
This is going to take some soul-searching and adjusting for boomers, their families and employers.
According to the SCL report, nearly 30% of boomers have nothing saved for retirement. For those who do have savings, the median balance was $290,000 for those born between 1948 and 1953 and $209,246 for those born between 1954 and 1959.
Here’s a reality check for you: If you have $290,000 in retirement savings, you can expect to generate about $11,900 in annual income, based on a 4% annual withdrawal. Next, add in Social Security benefits. But that’s no panacea.
The average Social Security monthly benefit for new retirees in 2018 is $1,460, or $17,520 annually, according to Social Security. Therefore, the total retirement income grows with Social Security benefits added in to $29,420 annually.
This is far less than the commonly recommended retirement income goal of 70 to 80% of your working income.
Are boomers making up for lost time, by accelerating their retirement savings rates? Not according to this study, that shows they aren’t even putting away the amounts they should have been putting away all along.
The SCL study summarized two analyses that suggest the amounts that boomers should be saving and compares those amounts to what boomers are actually saving.
The Boston College Center for Retirement Research says that workers who start saving at age 25 and want to retire at age 65 should save 10% of their income during those years. However, only 36% of all workers who have a retirement plan through their work actually contribute 10% or more.
Workers who start saving at age 35 and retire at age 65, should be saving 15% of their pay. However, in actuality less than 20% are contributing this much through their workplace retirement plan.
Boomers who come up against the hard realities of retirement, are likely to do what they have done all along—redefine this next stage of life.