11 Baby Boomers Retiring Statistics That You May Not Know

Baby Boomers Retiring Statistics

My parents are in the baby boomers category (born between 1946 and 1964) which make up over 25% of the U.S. population. This age group was the largest generational group in U.S. history (about 77 million) up until the millennial generation recently surpassed them. They have and continue to have a significant impact on the economy. Here are 11 baby boomers retiring statistics you may not know.

11 Baby Boomer Retirement Facts

1) Thousands of baby boomers are reaching retirement age every day

Did you know that an average of 10,000 baby boomers are turning 65 each day (source AARP)? This means that nearly seven boomers are turning 65 every minute. This trend is expected to continue into the 2030s

2) Thousands of baby boomers support their adult children

Many baby boomers end up decimating their finances by shelling out money on their adult kids. Not Debt Free Dr! As a parent now with two young boys, I completely understand how it feels to want to help. Parents typically have the best of intentions, but can put their family in peril when they choose to put kids’ college education ahead of retirement needs.

If you’re a Dave Ramsey follower, you’ve probably heard of his 7 Baby Steps:

  • Baby Step 1 – $1,000 to start an Emergency Fund
  • Baby Step 2 – Pay off all debt using the Debt Snowball
  • Baby Step 3 – 3 to 6 months of expenses in savings
  • Baby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement
  • Baby Step 5 – College funding for children
  • Baby Step 6 – Pay off home early
  • Baby Step 7 – Build wealth and give!

*Notice that saving for kid’s college (Baby Step 5) starts AFTER beginning to invest 15% of income.

3) U.S. states boomers flock to and those they avoid

States with baby boomer concentrations greater than 35%:

  • Maine
  • New Hampshire
  • Montana

States with the lowest concentrations of baby boomers:

  • California
  • Texas (I was surprised due to no state income tax)
  • Georgia
  • Arizona
  • Utah
4) Boomers are pretty glum

According to a survey taken by the Pew Research Center, it appears that the U.S. baby boomers are pretty glum. Take a look at their graph below.

Fully 76% of those 65+ say they are dissatisfied with the way things are going in the country today.

boomers satisfaction with direction of country

Boomers are also more downbeat than other adults about the long-term trajectory of their lives and their children’s.

According to a Pew Research survey,

  • 21% say their own standard of living is lower than their parents’ was at their current age
  • among all non-Boomer adults, just 14% feel this way

Baby Boomers Optimism

The same survey found that 34% of Boomers believe their own children will not enjoy as good a standard of living as they themselves have now; by contrast, just 21% of non-Boomers say the same.

5) U.S. Baby boomers control more than two-thirds of disposable income

Boomers beware! Don’t get scammed. The secret is out. One of the most concerning baby boomer retiring statistics comes from others knowing that:

  • Boomers are projected to have 70% of all U.S. disposable income over the next five years
  • Boomers will inherit about $15 trillion in the next 20 years

While researching “boomer” info for this post, I ran across an internet forum for people that were specifically targeting boomers. Now, there’s nothing wrong with marketing to a specific target market, it only turns wrong when advertisers don’t have their BEST interest in mind.

This forum listed facts about the number of retirees that had paid for homes and how they should be targeted to invest in “reverse mortgages” to pitch their products and services.

Again, as long as consumers are well informed to the point that they can make an educated decision, I’m ok with it. What I’m NOT OK  is with companies praying on their victims using “scare tactics.”

baby boomers scams

If you want to read about specific examples of older folks getting scammed, check out the AARP’s blog post, “Meet the Faces of Fraud: What you can learn from these six scams that ripped off older Americans.”

6) More boomers are applying for reverse mortgages

In 1999, only 6% of reverse mortgages applicants were from leading edge baby boomers, aged 62 to 64. Today, that number has dramatically increased to over 21% of applicants (1 out of 5).

Is 62 too young to take out a reverse mortgage?  Stephanie Moulton, an assistant public policy professor at Ohio State University and a former reverse mortgage counselor for AARP says this rising trend, “Spells trouble.”

reverse mortgage

If they don’t have other retirement assets and they’re spending down the equity in their house, these “young” reverse mortgage borrowers are putting themselves at great risk down the line.

Here’s something else alarming about this situation:

Many young borrowers are taking out reverse mortgages for the wrong reasons. Instead of using the extra money to live out their final years in comfort in their family home, the money is going to much-needed cash to cover short-term financial shortfalls. Which leads us to the next stat…

7) Baby boomers are not well-prepared for retirement

The conclusion of the 2017 Retirement Income Literacy Survey by the American College of Financial Services wasn’t too good. It stated that roughly three out of four people between the ages of 60 and 75 could not pass a quiz on basic retirement income concepts.

The majority of the questions missed dealt with:

  • Social Security
  • investing
  • long-term care

Fewer than 1% aced the quiz, results that David Littell, the retirement income program co-director at The American College described as “alarming.”

The median 401(k) balance of someone in the 55-64 age group is $177,805, according to a report from Vanguard. Using the commonly used “4% rule” of retirement, this translates to sustainable income of just $7,112 per year in retirement.

Even when combined with Social Security income, this isn’t nearly enough for most retirees to sustain their quality of life. Worse yet, 45% of baby boomers report having no retirement savings whatsoever.

8) Boomers are unfamiliar with investment basics

Here’s a few more stats from the Retirement Income Literacy Survey discussed above:

  • 80% understood mutual fund investing was less risky than single stock investing
  • Most didn’t realize small company stocks generally deliver bigger returns than other types of stock and bond investments
  • 30% knew an exchange-traded fund (ETF) generally has lower fees than an actively managed fund.
  • Many didn’t understand how changes in interest rates affect the value of bonds(as interest rates rise, bond fund values fall.)
9) Boomers are heading into retirement with loads of debt

According to an article on Nasdaq, many boomers are carrying a bigger debt burden into retirement. The article cited stats from the Federal Reserve Bank of New York that shows per-capita debt among 65-year-olds increasing by 48% between 2003 and 2015.

They are advised to evaluate their debts to curb the impact of their loans on their nest egg by checking the interest rate and tax treatment of their loans, as well as the reason why they incurred the debt.

10) Many boomers don’t know how to maximize social security benefits

40% of boomers responding to an investment survey weren’t aware their benefits would increase for every year they wait to claim between age 62 and 70. You can throw my parents in the group too.

They, like many other boomers, think that signing up for their benefits as soon as they can is the best policy.

  • One in three Americans over 65 relies on Social Security benefits alone.
  • Three out four claim benefits when they turn 62 out of financial necessity.
  • 2010 Social Security paid out more in benefits than it received in tax payments.
  • In 1950, 16 workers paid for each retiree’s SS benefit; In 2010, it was 3.3 workers and by 2025 it’s projected to be two workers.

One easy way to maximize benefits to to delay claiming Social Security for 2-3 years. (They’ll get an extra 8% for every year they wait to claim until age 70.)

11) Clueless about their current investment holdings

After both sets of grandparents passed away, I decided to sit down with my parents and talk about…money. Specifically, what type of investments their inheritance from their parents were in and what their current investments look like.

baby boomer investments

I admit, it was a bit awkward to get the conversation going, but I’m glad I did. My parents are fantastic, hard working and have provided all a blue collar, middle class family can. My brother and I never wanted for anything.

So I wanted to have a conversation to give back and help in any way I could with the money knowledge I’ve gained during the process of becoming debt-free.

My parents, like a third of boomers, admitted they had no idea how big (or small) a role stocks, mutual funds and bonds should play in their overall retirement portfolio. Many of their investments were tied up into mutual funds with high turnover and large annual fees. They assured me that they were making money according to each monthly statement they received, but they couldn’t tell me how much they were paying in expenses.

Confusion here is understandable because, unless boomers have basic investment knowledge, it’s tough to find the answers.

How you can help

I encourage others (with investing knowledge) to bite the bullet and sit down with parents, grandparents, other relatives or friends that can use basic financial help. You can’t imagine the load you’ll take off of them.

 

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8 comments

  • Good stuff. Glad I am not there. Sad statistics

  • Baby boomers are the generation that really got screwed.

    There was a transition from pension to 401k so shift of burden was put on individuals

    There was no easy way for information to get disseminated through internet/blogs how to prepare for retirement

    Index funds were unheard of.

    It is no wonder they are entering retirement ill prepared

    • Xrayvsn: You’re correct. This is one of the greatest generations out there and it’s too bad that they are getting “messed” over. There are so many folks out there, such as yourself, that have boomer relatives and friends. I encourage all of us that can help them with financial education and guidance to do so.

  • Younger baby boomer here. I’m working hard to catch up retirement savings, but other than that, most of the negative stats don’t apply to me. I was surprised and curious to read that Maine, New Hampshire & Montana are states baby boomers flock to, because the winters are harsh. Why are they going to those states?

    • Hi Baby Boomer Super Saver: I too was surprised at the states where Boomers are moving to. Maybe they know something we don’t know about…..

      • I would love to know more about “why” some states are chosen. As a late boomer, myself, I’m starting to look at the “location for retirement” as a key item. I’m lucky…and prepared…my parents were of the “greatest generation” and showed me well how to live beneath my means, save, and invest.

  • I took the quiz and passed but there are enough trivia questions on there that ask about useless pieces of information that it is fairly obvious that it was designed to fail most who take it. There were several annuity and whole life insurance questions for instance when all most people need to know about those products is to avoid them. Also details about nursing home statistics that have no relevance to anyone’s retirement decision making. The purpose of that kind of quiz is to generate scary headlines, not to advance knowledge. Nice post though, as usual!

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