As the oldest members of the baby boomer generation begin to turn 67 and become eligible for Social Security benefits, the question is coming up over and over again about how prepared these baby boomers are to begin and enjoy their retirement.
These oldest baby boomers are not only part of the largest population demographic ever, but they were also hit by one of the worst economic recessions in our nation’s history just as they were heading into retirement. According to a study conducted by the MetLife Mature Market Institute in 2007, baby boomers were expecting to retire at an average age of 66.3 years of age.
After the bottom fell out of the economy in 2008, MetLife did a follow-up and the average expected age of retirement among working baby boomers had increased to 68.6 years of age, and by 2012, the expected retirement age had increased to 71.2 years of age.
The 2008 financial crisis directly impacted the baby boomer’s ability to retire when they had initially planned to. The devastation of the stock market and the resulting loss in in stock value did impact may baby boomers’ retirement accounts although the MetLife study showed that only thirty-three percent of the oldest baby boomers owned stocks.
Many older individuals have a lower tolerance for risky investments feeling that economic volatility is not a safe bet as one gets older. Many baby boomers have defined pension plans since that was the traditional retirement path for many working individuals during the baby boomer generation.
Consequently, only about twenty percent of baby boomers own bonds, the popular alternative to stocks and considered a much safer, less risky investment. Another fifty percent of baby boomers have either a 401kor 403b retirement plan or an IRA and another third have rolled their savings into an annuity.
Many baby boomers felt the impact of the 2008 financial crisis most heavily on their ability to retire because they actually lost their primary jobs in the wake of the financial crash. Additionally, the job they lost many times carried the retirement plan that they were relying on for retirement. When this happened to the older baby boomers, it was very difficult for them to find new work, much less one with a retirement plan.
According to the MetLife study, about half of the oldest baby boomers are in good shape for retirement and on track toward their retirement savings goals. This is an increase of twelve percent from 2008.