Boomers, Don't Panic on Your Retirement

Article excerpt

BABY boomers have heard much gloomy talk about their retirement prospects. Their hopes of getting proper Social Security payments are dim, doomsayers allege. A Merrill Lynch & Co. study released last month found that boomers are saving at a rate of only 35.9 percent of the amount they need to maintain a consistent standard of living upon retirement.

However, a recent study done by the Employee Benefit Research Institute in Washington puts some perspective on the issue. "We are cautioning people not to take such a negative view," says Carolyn Pemberton, an EBRI official.

It will be 17 years before the first of the 76 million boomers reach retirement age. A lot can happen in those years to better or worsen their financial situation. Key factors include trends in economic growth, productivity, housing values, health-care costs, and participation rates in private or public pension plans, plus changes in Social Security benefits and taxes to pay for them.

These are impossible to predict, Ms. Pemberton notes.

However, at the moment, the EBRI sees this situation:

* Boomers, in general, will enjoy a standard of living (a real level of consumption) in retirement that exceeds that of their parents. However, it is not clear whether they will be able to maintain the standard of living they enjoyed while working. Boomers may consider their retirement income inadequate if it is below what they have become accustomed to.

At present, this generation is doing considerably better economically on average than their parents at similar points in their lives. A possible exception is the poorest segment of the youngest boomers. A Congressional Budget Office study reckoned that this relative prosperity of boomers has much to do with the greater likelihood that they will remain single longer, have fewer children, and combine mothers' marketplace work with child-raising. …