Boomer retirements on hold

By Tom Hintgen (Contact) | The Daily Journal

Published Monday, January 5, 2009

Even before the current financial woes, many baby boomers — especially the first wave of boomers who were born shortly after World War II — planned to work well into their sixties. With the loss of various portions of retirement savings, it’s now a given that many boomers will keep on working, at least part time, and defer Social Security.

"Many baby boomers have too much debt and not enough savings to weather even a short-term disability," said Karen Ignagni, President and CEO of AHIP (America’s Health Insurance Plans). “Most boomers we surveyed said they would have difficulty making their mortgage payments, car payments, credit card payments, and/or supporting dependents within the first year of retirement.”

The baby boomer generation includes those born between 1946 and 1964. Many of the older ones, notes the Wall Street Journal, are in no position to retire. Journal writers say that many of those boomers are quick to point the finger rather than confess to their own lack of financial planning.

Many baby boomers didn’t follow the example of their parents, part of the Greatest Generation who served at home and abroad during World War II. People born during the 1920s worked and saved, while living modestly. Their average household savings rate rose from below 15 percent in their early 20s to about 30 percent when they were in their late 40s.

But that pattern was almost absent for early boomers who were born between 1946 and 1954. Their savings rate topped out at about 20 percent. For the latter group of boomers, who were born between 1955 and 1964, their savings rate went from about 10 percent in the 1980s to only two percent today.

The AHIP survey assessed how financially prepared baby boomers are if the primary wage earner in their household became disabled and was unable to work for an extended period of time. Most baby boomers (55 percent) say they’re not at all or somewhat unprepared. Only 15 percent say they’re very or extremely prepared if a disability occurred.

Baby boomers were also asked how long they could go without their primary wage earner's income before they had difficulty paying all their bills. Nearly two-thirds (64 percent) would have difficulty within the first year.

Close to 80 percent of today's 76 million baby boomers plan to keep working in the future. More than half of them are interested in pursuing new careers.

Many boomers opt for part-time employment. This option is particularly appealing for boomers who want flexibility in their schedules or cannot find full-time employment.

"A part-time job can keep you physically, mentally and socially active and allow you to experiment with a new work role without the commitment and energy drain of a 40-hour work week," said Laurence Shatkin, co-author of “225 Best Jobs for Baby Boomers.”

Working part-time, Shatkin said, is also a great solution for boomers who want to retire but can't because they're financially unprepared to leave the work force.

"Part-time work may be financially feasible even though you’ll be paid for fewer hours and probably at a lower hourly rate," Shatkin says. "Social Security, a pension, a 401(k) or some combination of these may not be enough to cover all of one’s income needs.”

A big concern of baby boomers these days is health care coverage, or lack of it.

At any rate, Americans age 60 and older will remain in the workforce for many years to come.

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Tom Hintgen is a reporter with The Daily Journal. His column runs Mondays.