The Baby Boomer Retirement Crisis: We Are Not Alone

American baby boomers in general are not prepared for retirement. Many experts call this a crisis in the making. The crisis is that many of us will have to work into our 70′s to make ends meet, if we are healthy enough to do so. Others may not be that fortunate. Retirement will be forced upon them by health or other circumstances. They will live in relative poverty. It turns out that we are not alone. The crisis is world-wide.

A recent article from the Associated Press tells us that the three major problems that have created a retirement crisis exist on a global scale:

  • Many countries are cutting retirement benefits while also raising the retirement benefit eligibility age.
  • Employers have eliminated traditional pension plans.
  • Baby boomers overspent and under-saved before the 2008 recession, after which they saw much of their wealth eliminated by the downturn.

Much of the pessimistic data comes from the Organization for Economic Cooperation and Development (OECD), comprising 34 relatively wealthy countries.

The poor economic conditions in most of the OECD countries will be a significant contributor to the retirement crisis.  On average, OECD governments provide 59 percent of retiree income, as high as 86 percent (in Hungary). Here in the U.S., the government provides only about 38 percent of retirement income, which is still a huge burden. This means that governments will have to continue a trend of reducing benefits and increasing eligibility ages.

Here is a typical fact pattern from the article:

Leslie Lynch, 52, of Glastonbury, Conn., had $30,000 in her 401(k) retirement account when she lost her $65,000-a-year job last year at an insurance company. She’d worked there 28 years. She has depleted her retirement savings trying to stay afloat.

“I don’t believe that I will ever retire now,” she says.

The pattern of raiding retirement accounts to fund current lifestyles is now well-ingrained in our culture. I wonder if our fellow boomers need to go into crisis mode sooner, before experiencing something terrible like a job loss?

I don’t know about you, but knowing that millions of other boomers in other countries are facing the same retirement crisis does not make me feel any better.

Here is a link to the full article.


Comments

  1. MIke says

    This is a problem that is 30+ years in the making and is not the result of the recession. Leslie Lynch only had $30,000 in her 401(k) after 28 years of working for the same employer! She was never going to be able to retire, she just didn’t know it. While I don’t take any pleasure in her plight, I can’t feel sorry for her either. Insurance companies provide great benefits. What did she spend all of her money on? I’m 50 and have been saving for 20+ years. The need to save is not new. SSI was never supposed to provide for all of your needs.

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