As over 30 million “peak boomers” begin to enter retirement, a report from the Alliance for Lifetime Income’s Retirement Income Institute reveals that many of them are financially unprepared for this next stage of life. This specific cohort, born between 1959 to 1964, known as “peak boomers,” faces significant economic challenges, with over half of them having $250,000 or less in assets. This will result in most of them relying heavily on Social Security income during retirement, putting a strain on the system and potentially affecting the overall economy.
The impending retirement wave of peak boomers could have far-reaching consequences on the US economy, with as many as 14.8 million peak boomers needing to be replaced in industries such as manufacturing, healthcare, and education. The decrease in economic productivity and consumer spending, particularly in the transportation sector, is projected to be significant as the generation transitions into retirement. However, the report suggests that younger employees may fill some of the vacant positions left by retiring boomers, and advancements in technology could help boost overall productivity.
As the retirement crisis looms, a shift from traditional defined benefit pensions to contribution plans like 401(k)s has left many peak boomers financially vulnerable. With disparities in retirement savings along racial and gender lines, coupled with potential underfunding of pension plans, the situation is increasingly dire. Many older Americans, including those in the peak boomer category, are living on meager incomes, raising concerns about financial security for retirees in the future.