Baby boomers face uncertain retirement years with poor savings

Baby boomers face uncertain retirement years with poor savings

Baby boomers, those who were born in the post-World War II era, face an uncertain retirement brought about by poor personal savings and shoddy financial planning, analysts say. An estimated 10,000 baby boomers will turn 65 each day beginning next month and the trend will continue for the next two decades. "The situation is extremely serious because baby boomers have not saved very effectively for retirement and are still retiring too early," Olivia Mitchell, the director of the Boettner Center for Pensions and Retirement Research at the University of Pennsylvania told AP. The savings rate of baby boomers are of particular concern. During the 1970s and 1980s, the personal savings rate were nearly ten percent. But by 2007, it had fallen to -1 percent. The economic crisis helped pull up the rate to 5 percent currently but total savings have not reached the ideal amount for most retirees who want to at least retain their lifestyles.

According to the Center for Retirement Research at Boston College, about 51 percent of those aged 55 to 64 will likely to have lowered living standards during their senior years because of dwindling financial resources. Pension plans are disappearing, with only 15 percent of private sector employees having a pension today compared to 39 percent in 1980 according to the Employee Benefit Research Institute. Another problem is that many baby boomers relied heavily on the value of their homes for their retirement. But as the housing market collapsed, so did the value of their properties. Many homes are just 2/3 of their original value and about 11 million Americans, many of them baby boomers, have heftier mortgage dues than what their homes are presently worth.

Posted by James Fried on Tuesday December 28 2010, 2:28 AM EST. Ref: AP. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0