The majority of the 30.4 million baby boomers expected to retire over the next six years are not financially prepared for retirement, particularly Black and Hispanic Americans and those without college degrees. That was one of the key findings of an econometric study commissioned by the Alliance for Lifetime Income, which was presented at the National Press Club on April 18.
The study looked at “peak baby boomers,” the last and largest cohort of the baby-boomer generation turning 65 between 2024 and 2030.
Peak boomers’ median retirement assets of $225,000 and Social Security are not adequate to maintain their pre-retirement level of living, said Robert Shapiro, chairman of economic advisory firm Sonecon and author of the study, during the presentation.
Shapiro reported enormous gaps in retirement assets based on education, race and, to a lesser extent, gender.
More than 1 in 3 peak boomers (36%) are high school graduates who have median retirement savings of $75,000 for their “whole retirement apart from Social Security,” he said.
The 9% of peak boomers who don’t have high school diplomas face an even more precarious future, having median savings of $7,000.
“Those without a college degree are by and large not prepared for retirement. They have not saved enough,” Shapiro said.
The study also revealed significant savings disparities by race and gender. White Americans, for example, had median savings of $299,000 compared with $123,000 for Hispanics and $49,000 for Blacks.
Gender disparities were also large, with men having median savings of $269,000 compared with $185,000 for women.
The report also explored the impact of peak boomers’ exit from the workforce on the economy.
“We are looking at 10% of the labor force leaving,” Shapiro said.
Their departure will have significant effects because older workers, he said, “are by and large more productive than the rest of the labor force. They have more experience.”
Shapiro estimates that the retirement of peak boomers will lower productivity by just under 1% and reduce gross domestic product growth by 7.9% by 2030.
Some of the effects will be offset as people enter the workforce and jobs vacated by peak boomers are filled by those just behind them, Shapiro said.
Nevertheless, the impact is expected to be significant.
“There is certainly strong suggestive evidence that this will have a dampening effect on the trend growth rate over this period,” Shapiro said.
