About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

The Retirement Prospects of the Baby Boomers 1 (March 2004)

handle is hein.congrec/cbo10168 and id is 1 raw text is: A series ofissue summaries from the Congressional Budget Office MARCH 18, 2004 The Retirement Prospects of the Baby Boomers I 1 The approaching retirement of the baby-boom genera- tion has become a public concern-partly because of the budgetary pressures that will develop when baby boomers collect Social Security and Medicare benefits, but also because of claims that boomers are not accu- mulating enough private savings to finance their retire- ment. However, there is no widely accepted standard of what constitutes enough savings, mainly because retirement preparations are largely a matter of personal choice. Recent studies apply a range of different stan- dards and provide a more complete picture of boomers' finances. Compared with their parents at the same age, baby boomers typically have higher income, are preparing for retirement at largely the same pace, and have accu- mulated more private wealth. On the whole, boomers are on track to have higher income in retirement than their parents and appear much less likely to live in pov- erty after they retire. Concerns About the Baby Boomers' Retirement Baby boomers-people born between 1946 and 1964 make up one of the largest and most prosperous genera- tions in U.S. history. As a group, boomers have enjoyed higher income during their working years than any pre- ceding generation, and they have been accumulating sub- stantial savings, in part to provide for their retirement. As they move out of the workforce and into retirement over the next 25 years, boomers will begin to draw on those savings, collect private pensions, and become eligible for benefits from government programs such as Social Secu- rity and Medicare. That impending wave of retirements has become a source of concern for two reasons. First, the population of retir- ees will grow much more quickly than the taxpaying workforce, at a time when average benefits per retiree are expected to continue rising. Those developments will place severe and mounting budgetary pressures on the Within that overall picture, however, about a quarter of baby-boomer households have so far failed to accu- mulate significant savings. They appear likely to de- pend entirely on government benefits in retirement. At the other end of the spectrum, at least half of the households are expected to maintain their working-age standard of living during retirement (under the as- sumption that current laws governing federal benefit programs do not change). For the remaining quarter of boomer households, the evidence is mixed: under midrange assumptions about saving, rates of return, and retirement age, they appear set to experience mod- erate declines in their living standard during retire- ment, which could be offset by modestly increasing saving and by working for a few more years. For many boomers, a relevant issue is the degree to which they could be affected by-and plan for-any future changes in federal retirement benefits. federal government.1 Second, some researchers have questioned whether many boomers are accumulating enough wealth to pay for an adequate retirement. Not only could inadequate saving leave boomers poorly pre- pared, but it could compound the government's budget- ary problems by limiting the growth of investment, pro- ductivity, and wages (which drive federal revenues). The Congressional Budget Office (CBO) recently re- viewed the research that has been conducted over the past decade on the retirement prospects of aging Americans.2 1. For more details, see Congressional Budget Office, The Long- Term Budget Outlook (December 2003), A 125-Year Picture ofthe Fed- eral Government's Share of the Economy, 1950 to 2075, Long-Range Fiscal Policy Brief No. 1 (June 14, 2002; revised July 3, 2002), and The Looming Budgetary Impact of Society's Aging, Long-Range Fiscal Policy Brief No. 2 (July 3, 2002). 2. See Congressional Budget Office, Baby Boomers'Retirement Pros- pects: An Overview (November 2003).

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most