Two-thirds of Americans who will turn 65 between 2024 and 2030 are not financially prepared for retirement and are at risk of outliving their savings. This is the stark finding in a study by Robert Shapiro, the former under secretary of Commerce for economic affairs.
Between now and 2030, 30.4 million Americans will turn 65, according to the study, which was commissioned by the ALI Retirement Income Institute. Based on their assets and likelihood of living 20 or more years in retirement, peak boomers will be challenged to maintain their lifestyles in retirement.
Fifty-three percent have assets of $250,000 or less, making it likely that they will run through their savings and have to rely mainly on Social Security for income. Another 14.6% have assets of $500,000 or less. On average, Social Security benefits are intended to replace about 40% of a person's annual pre-retirement income, according to the Social Security Administration.
"America has never seen so many people reaching retirement age over a short period, and well over half of them will find it challenging to meet their needs through their retirements, let alone maintain their current standard of living," Shapiro said in a statement. "They lack the protected income that many older boomers have from solid pensions or higher savings."
Demographic Differences
Shapiro found sharp differences in retirement savings and security based on gender, race and ethnicity, and education. While the median retirement savings for all peak boomers is $225,000, it breaks down this way by those demographics:
- $269,000 for men vs. $185,000 for women
- $299,000 for whites vs.$123,000 for Hispanics and $49,000 for Blacks
- $591,000 for college graduates versus $75,000 for high school graduates and $7,000 for those without high school diplomas
A quarter of peak boomers have defined benefit pensions, and among them the demographic disparities are modest. Private employers provide about half of those pensions, and state and local governments provide just under half.
Shapiro noted, however, that 2022 data showed that the median annual benefit for the public defined benefit pensions is $25,450, or 44% greater than the median benefit of $17,640 for the private ones.
"The saving grace for some peak boomers is that they can count on the added protected income that a pension provides in retirement," Jason Fichtner, executive director of the ALI Retirement Income Institute and chief economist at the Bipartisan Policy Center, said in the statement.
