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Baby boomers have often been characterized as the profligate offspring of the depression-era savers now known as the "greatest generation." Newspaper headlines frequently warn that aging boomers are headed for financial catastrophe in retirement because they are not saving enough. We also see stories, albeit less frequently, that boomers will be the richest generation in history. Some have argued that boomers will inherit anywhere from $10 trillion to $40 trillion in wealth, which yields between $132,000 per boomer (which is more than the median boomer household had accumulated by 2001) and $560,000 per boomer. Can these seemingly conflicting stories be reconciled?
Divining the retirement fate of baby boomers has become a regular preoccupation of journalists and pundits, who know that stories about boomers are sure to capture the rapt attention of that most educated, numerous, and (some would say) self-absorbed generation in American history. But the answer to the question of the adequacy of boomer retirement preparation is an elusive one. The preponderance of the punditry seems to suggest a pessimistic conclusion, but some of the best work on the subject is more optimistic.
Part of the difficulty in projecting boomers' retirement security is that the youngest boomers are still at least 20 years from retirement, so that projecting their retirement preparation is somewhat hazardous, while the oldest boomers are a mere four years from Social Security early retirement eligibility. An added difficulty is that boomers and even near-retirees show signs of staying in the work force longer, which can strongly influence retirement calculations. In addition, few data sources permit the estimation of total retirement wealth, because they lack information on one or more components of wealth. In particular, numerous wealth studies omit information about wealth from Social Security or defined benefit (DB) pension plans. Another issue is defining the standard of adequacy. Some have compared boomers' resources with those of their parents at similar ages, and some have argued that adequacy should relate more to boomers' own preretirement income, not to their parents' income.