Baby Boomers Better Prepared for Retirement than Previous Generations

    A new report says that most baby boomers have successfully stuffed enough pennies into the piggy banks – and dollars into the 401(k) plans – to retain their status as the most pampered generation in America, even in retirement.

    Americans have put away $18.5 trillion for retirement in 401(k) contribution plans and defined benefit pension programs, according to the report published by the Investment Company Institute.

    ‘Pyramid’ of Retirement Funding

    The ICI study said that although the sputtering economy has slowed recent gains, the average household still has $153,100 in retirement savings. That is up only 2 percent since 2005, but is 50 percent more than it was in 1995 ($105,400) and 173 percent more than in 1985 ($56,100).

    According to the ICI press release: “Most households maintain their standard of living when they retire. In addition, analysis shows that, on average, more recent retirees have higher levels of resources to draw on in retirement than previous generations.”

    The ICI study said that people are now using a five-tiered system “pyramid” to build their retirement nest. Homeownership, pensions, IRAs, and other assets supplement their Social Security benefits and carry them through retirement.

    Social Security is still the foundation of the pyramid plan, but it has become an increasingly smaller portion for many retirees.

    Those with the least amount of total retirement assets, less than $93,500, are counting on Social Security to provide 82 percent of the money they’ll have for retirement. Social Security accounts for 58 percent for those with $294,000 in retirement assets; 41 percent for those with up to $543,000; 28 percent for those with $994,000; and 14 percent for those with $2 million or more in retirement assets.

    “Contrary to what we too often hear, the U.S. retirement system has successfully provided generations of Americans the resources they need in retirement,” ICI President and CEO Paul Schott Stevens said in the press release.

    As Schott’s statement suggested, not all boomers believe life won’t change much when they retire. Some are still struggling to reach their goal of retiring by age 65 and for most of them, it’s not saving, it’s spending that is holding them back.

    Spending Habits Hold Boomers Back

    The National Center for Policy Analysis did a study comparing spending habits for workers 45-54 and 55-64 with spending habits for the same age groups 20 years ago, and results were not that encouraging.

    Mortgage debt is the largest expense, as some boomers bought bigger and more expensive houses than they could afford. When the real estate market crashed, so did their finances.

    Student loan debt, dating back to their days in college in the ’60s ‘‘70s, is another anchor tying boomers down. New York’s Federal Reserve Bank did an analysis recently that showed one-third of the nation’s $1 trillion student loan debt belongs to people 40 or older.

    Other expenses weighing down boomers include health care costs and paying living expenses for adult children. Boomers are still picking up expenses like medical bills, home and car loans, and weekly spending money.

    Still, overall the news is very good for the newly retired and soon-to-be-retired baby boomers.

    Poverty among people age 65 and older dropped from 30 percent in 1966 to 9 percent in 2011, leaving a smaller percentage of seniors living in poverty today than the percentage of people 18-64 (14 percent) and 18 and younger (22 percent).


    Bill Fay
    Staff Writer

    Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at

    In debt? We can help!

    • Amount
    • Type
    • Contact

    How much do you owe?

    What can we help you with today?

    Related Articles

    Older couple sitting with papers and considering bankruptcy

    Retirees and Bankruptcy

    People are supposed to relax when they retire, not worry about financial problems. Studies show that a lot of retirees turn to alcohol for debt relief, but there is a better way than booze:  Bankruptcy.The mere word makes a lot of people cringe, ...

    Continue Reading
    myRA Account is my retirement account

    MyRA Account Starting Point For Retirement Savings

    The United States government is opening the door to retirement savings for the millions of Americans who have nothing invested there, but a word of caution if you go inside: There’s not much to see.The federal government is offering a retirement account ...

    Continue Reading
    Jar full of coins intended for a 401K savings plan

    Employers Up The Ante On 401k Plans

    There is a new twist on the ages old discussion about how much is needed for retirement savings: Employers – not employees! – are taking the initiative.The Vanguard Group, an investment management company, said that 36 percent of the companies it ...

    Continue Reading
    Large cost for education

    Workers Put Paying For Child’s College Ahead Of Retirement Savings

    American workers have found another escape hatch to avoid contributing to their retirement savings and at least 33 percent of them say they would voluntarily take it.The LIMRA Secure Retirement Institute released a study that said one-third of U.S. ...

    Continue Reading
    Rent Or Own Your Home In Retirement

    Key Retirement Question: Rent Or Own?

    There are 10,000 Baby Boomers retiring every day for another 14 years, which means a lot of people have a choice that will have a monumental impact on their retirement: Rent or own?Wait a minute. Didn’t they settle that question 20 or 30 years ...

    Continue Reading
    Senior Student Debt

    Social Security Checks At Risk As Seniors Take On Student Loans

    Wanda Russell had just turned 50 when her bosses told her she would have to go back to college and get a bachelor of nursing degree to keep her job.Russell gulped. Back to college? At this stage of my career?Russell was an assistant nurse manager for ...

    Continue Reading
    Signing Will

    No Cash for a Will? Leave a Fond Memory Instead

     As a growing number of retirees come to grips with their dwindling cash flows to leave as inheritance, many are turning to other ways to preserve their memory for future generations. Gone are the days that an inheritance means a big ...

    Continue Reading
    teen taking money

    Teens Are Counting on Parents to Finance Retirements, Study Shows

    Attention moms and dads: your teens are counting on you for more than a few bucks for a movie or some new clothes. They’re depending on you to pay for their retirements too. About 40 percent of young Americans aged 13 to 22 are expecting an ...

    Continue Reading
    Get Help Now

    Overwhelmed with debt? You have options for lower monthly payments!