Recently, CBS News ran a rosy report about retiree Seth Goldstein, a 75-year old inventor and retired engineer driven by a passion to create, who is hailed as “charting a course for the Baby Boomer generation” by reporter Julianna Goldman. To be accurate, Goldstein is actually older than the 51 – 69 year old Boomers. Goldstein is a “war baby” member of the “Silent Generation” (born 1923 – 1945). He is portrayed as emblematic of a resourceful and inspirational approach to staying active, relevant and fulfilled as we age. But contrary to the reporter’s assertions, Mr. Goldstein is hardly “reinventing” retirement. In the “new” economy, reinventing retirement is figuring out how to start an encore career and earn money, not pursuing a hobby.
While I applaud Mr. Goldstein for his achievements and support his attitudes towards life and work – very relevant for members of all generations – the report’s headline, referring to “passion, not paychecks,” as a watchword for retirement, seriously ignores the plight of millions of baby boomers who literally cannot afford to retire, and won’t be able to achieve the kind of financial and creative equanimity that Mr. Goldstein represents. It is irresponsible to suggest that boomers on the verge of retirement should blithely focus on being creative and celebrating life, when the economic security that Mr. Goldstein enjoys is out of reach for a significant percentage or our generation.
Mr. Goldstein, who, along with his wife, retired from his field with a pension, represents the experience of earlier generations who have benefited from the corporate and social largess that is no longer the norm. It is the world that we boomers were raised to believe in, but Mr. Goldstein’s version of retirement has turned out to be an aspirational myth. Boomers with the assets and support to retire comfortably represent a smaller and smaller segment of the aging population in our country. Hammered by the Great Recession, reduced pension plans, rising healthcare costs, corporate downsizing, as well as by ageism and reduced opportunities for employment, boomers are going to be increasingly squeezed financially as we age. Many of us are caring for our elderly parents, as well as for our millennial kids who are having a hard time getting launched.
The numbers tell the real story.
The National Retirement Risk Index (NRRI) shows the share of working-age households who are “at risk” of being unable to maintain their pre-retirement standard of living in retirement. This periodic study is based on the Federal Reserve’s annual Survey of Consumer Finances. According to a 2014 report from The Center For Retirement Research at Boston College (CRRI), the latest NRRI shows that just over half (52 percent) of all current working age households (which includes the majority of boomers – aged 51 – 65) are currently assessed as unable to maintain their pre-retirement standard of living. In comparison, the NRRI was 31 percent in 1983.
How much have boomers actually saved for retirement? It’s better to be an upper-income earner with a 401(k). As reported by the AARP, the average balance for Fidelity 401(k) retirement savings accounts is about $270,000 for people who have been contributing to their account for 10 years. That sounds like a good start, but that amount will just cover the $220,000 expected healthcare costs for a 65-year-old couple in retirement. For the not-so-fortunate, the CRRI reports that the typical account for a worker nearing retirement is only $42,000 – and a whopping 55 percent of current workers don’t have any employment-based savings at all!
When all boomers are taken into account, the picture looks pretty bleak: overall, AARP estimates that three-quarters of Americans between 55 and 64 have saved less than $30,000.
According to Gallup, it is no wonder that retirement savings is the top concern for 59 percent of Americans (more than eight other financial concerns), who say they are “very worried/somewhat worried” about having enough money for retirement. This percentage is up 6 percent since 2001.
Rather than creating an unrealistic picture of retirement for its audience, media news outlets like CBS should be reporting on the reality of retirement, and advising workers how to start encore careers, learn new skills, build confidence and stay relevant so that they can survive, and hopefully thrive, in this next stage of life.