Baby Boomers Face a Rough Retirement: Few Are Saving Enough Right Now
Young, Catherine, The Washington Times (Washington, DC)
Baby boomers are in a quandary. Since their parents have been living longer and retiring earlier on decent pensions, boomers assume life in their twilight years will be the same for them.
But boomers are notoriously bad at saving money, especially now - in their peak earning years. In 20 years, when the majority hit retirement, experts say that many of the 76-million-member generation pool will not be able to afford to retire. And when they do, they will get less of the retirement pie because there will be more at the feeding trough.
Figures from the D.C.-based Urban Institute show that those who retired in 1995 will receive $37,000 more from Social Security than they paid in taxes. Those who retire in 2010, however, will wind up with $73,000 less than they contributed.
All sorts of voices are beginning to address the problem. In this month's issue of George magazine, Peter Peterson - author of "Will America Grow Up Before It Grows Old?" - writes:
"[Baby boomers'] parents retired well because they did so the old-fashioned way: They saved and invested more. Somewhere along the line, however, we got carried away and started saving too little, entitling ourselves to too much, and borrowing instead of saving."
Similar baby-boomer woes were addressed Jan. 10 in a wide-ranging TV special, "You're On Your Own," produced by CNBC. The program quoted San Francisco futurist Ken Dychtwald as saying, "I think there's no doubt that in the 21st century very few people will be able to afford the luxury of retiring young."
The Employers Council on Flexible Compensation estimates that the average 30-year-old needs personal savings of $1.1 million by retirement in order to receive an annual retirement income of $26,000.
Today, senior citizens receive income from three sources: Social Security, employee pension plans and personal savings.
But few retirees have savings of $1 million or anything approaching that. The Social Security trust fund is estimated to run dry by 2029, according to Social Security actuary tables and the unbalanced ratio of workers to pensioners that will result when the baby boomers begin to retire.
U.S. Census Bureau figures show that 76 million people will receive benefits but only 65 million members of "Generation X" - the "baby bust" generation - will be putting funds back into the system. …