This Issue Brief examines
the baby boomers' retirement income prospects by
analyzing trends in the elderly's income and pension
participation among workers; examining saving behavior
and critically evaluating studies of the adequacy of the
boomers' saving; and looking at tenure trends, lump-sum
distribution preservation, and changes in Social Security
benefits.
Since the mid 1970s, the real
median income of individuals aged 65 and over has
increased 18 percent. Sources of income have shifted,
with employment-based pensions increasing and earnings
and asset income decreasing as a proportion of income.
The boomers' prospects are partly
dependent on participation in employment-based retirement
plans. After decreases in the sponsorship rates,
participation rates, and vesting rates of workers during
the 1980s, all three percentages increased during the
early 1990s.
Data do not support the perception
that the U.S. work force is becoming increasingly mobile.
Tenure levels for prime age workers in the 1980s and
beginning of the 1990s were higher than those of previous
decades. Still, in response to competitive pressures,
employers may not offer the security of paternalistic
benefit packages as in the past.
Various studies have reached
different conclusions regarding the adequacy of the
boomers' financial preparation for retirement. Evidence
indicates that boomers, in general, will enjoy a
retirement standard of living exceeding that of their
parents. It is less clear whether they will maintain a
standard of living in retirement comparable to that of
their working years. To the extent they are willing to
tap housing wealth, they would appear at this early stage
to be in good shape.
Federal fiscal policy decisions
will impact boomers by affecting their disposable income
today, and thus their ability to save, as well as the
benefits they will receive in retirement through Social
Security and Medicare.
The boomers are 17 to 35 years away
from age 65. Given the heterogeneity of the boomers,
research is needed to identify what specific groups
within the generation are at risk and the magnitude of
that risk. Groups that would now appear to be at risk to
some degree include non-homeowners, the less educated,
the single, and the youngest boomers.
