Between 2024 and 2030, more than 30 million Americans will turn 65. However, according to a new study by the ALI Retirement Income Institute, a majority of those hitting retirement age by 2030 are not financially prepared for retirement. Based on their assets and the likelihood of living 20 or more years into retirement, two-thirds will face difficulty maintaining their current lifestyles. "America has never seen so many people reaching retirement age over a short period, and well over half of them will find it challenging to meet their needs through their retirements, let alone maintain their current standard of living," Robert Shapiro, the former Under Secretary of Commerce for Economic Affairs and the study’s author, said in a statement for ALI. "They lack the protected income that many older Boomers have from solid pensions or higher savings." More than half (52.5 percent) have assets of $250,000 or less, the study found. This will make it more likely those individuals will have to rely primarily on Social Security for income. Another 14.6 percent have assets of $500,000 or less, so almost two-thirds will struggle to meet their needs in retirement. Social Security is designed to replace only about 40 percent of the average worker’s pre-retirement earnings, the Social Security Administration says. Nearly a quarter (24 percent) of peak boomers have pensions. Private employers provide about half of those pensions, while state and local governments provide just under half, according to the study. "The saving grace for some Peak Boomers is that they can count on the added protected income that a pension provides in retirement," Jason Fichtner, Executive Director of the ALI Retirement Income Institute, and Chief Economist at the Bipartisan Policy Center, said in the statement. "However, since only 4 percent of all private sectors workers had protected income from a pension as recently as 2020, this economic study of peak boomers should be a cautionary tale to all Americans planning for retirement." The study found peak boomer retirements between 2024 and 2030 could have a significant impact on the U.S. economy. Employers will have to replace between 10.8 million and 14.8 employees, including one to two million each in the fields of manufacturing, construction, health care, education, and professional services. Additionally, the retirements could reduce GDP growth by 7.3 percent by 2030; lower consumer spending by 15.3 percent; and because of higher draws on Social Security and Medicare, add $347 billion to entitlement spending by 2030.The U.S. will soon face the biggest wave of retirements in history as baby boomers turn 65 over the next few years.
