Every day, 10,000 more Baby Boomers hit retirement age, according to the Pew Research Center, but what does that mean these days? Several trends suggest that Boomers aren’t retiring in the same way their parents did. Here are five reasons why:
Longer lives. Baby Boomers are living longer than ever before. According to the Urban Institute analysis of Social Security Administration Data, men who turn 65 in 2030 can expect to live six years longer than those who turned 65 in 1970. The life expectancy for women at age 65 increased by four years over the same time period. For many, this means retirement will last longer—and cost more.
Better health. According to the Census Bureau, older Americans are smoking and drinking less, and more seniors are able to opt for assisted living or home health care than nursing homes. Staying in good health can help retirees better manage their out-of-pocket medical costs and make their retirement savings last longer. However, the same study reports that obesity remains a problem for a large number of Baby Boomers and could have negative health impacts down the road.
D.I.Y. retirement planning. Most Boomers won’t receive pensions from their employers, relying instead on the funds they’ve accumulated in 401(k)s and other investment vehicles. According to the Social Security Administration, from 1980 through 2008, the proportion of private wage and salary workers participating in pension plans fell from 38 percent to 20 percent. To make sure their nest egg lasts as long as a guaranteed pension, most Baby Boomers will have to invest wisely, watch fees, and consult experts when needed.
Higher levels of debt. According to a recent study, 51 percent of workers and 31 percent of current retirees say debt is a problem. Nearly one-quarter of retirees still have mortgage debt, and 27 percent hold credit card debt. Making recurring debt payments in retirement can be tough, reducing the amount of monthly income retirees can rely on.
More working years. According to the Bureau of Labor Statistics, the proportion of men ages 62 to 64 who are active in the workforce increased from 45 percent in 1994 to 56 percent in 2014. For women, that number jumped from 33 percent to 45 percent. Longer lives and better health are likely allowing people to work longer, but smaller retirement savings and larger debts often also play a role, forcing people to hang onto their jobs longer than planned.