The number of baby boomers who are deciding to retire is at a record pace, at 3.2 million more from 2019-2020 than in previous years. However, according to a Pew Research Center analysis of monthly labor force data, the makeup of those retirees is starting to change.
The recent increase is more pronounced among Hispanic and Asian American boomers -- up four and three points, respectively. On the geographic side of the equation, the increase is coming from those living in the Northeast U.S. -- up from 35 percent in February to 38 in September.
Job loss may be a factor
Pew researchers say job losses may be a dominant factor in this wave of retirements, probably at the hands of the COVID-19 recession. Since February 2020, the number of retired boomers has increased by nearly 1.1 million.
Pew couches that number by saying that some of this increase could reflect seasonal change in employment activity. But running the numbers from February to September period in 2019, the population of retired boomers increased by only about a fourth of what happened last year.
Another interesting metric is that the share of retiring boomers differs by education attainment. The number of boomers who finished their education when they graduated from high school are up two points since February, and those who completed a four-year degree are up one point. For those who had some college education, but didn’t walk away with a diploma, there’s been no change at all.
Will boomers have enough money to retire?
Baby boomers and retirement savings go hand in hand, and many of those new retirees face mounting challenges regarding their savings nest. Navigating that can of worms comes with things like supplemental Medicare insurance.
Baby boomers have an average of $152,000 pegged for retirement, according to the 19th Annual Retirement Survey of Workers conducted by the TransAmerica Center for Retirement Studies. While that may seem like a decent number when it stands alone, it’s not nearly enough to last through most people’s retirement. Based on information from the Bureau of Labor Statistics, adults between ages 65 and 74 spend $48,885 per year on average, which means they would blow through that $152k in less than four years.
Does this mean that boomers should be sounding the alarm? Not exactly, but the situation does beg a reassessment of how long a boomer’s savings can last. It also begs the question of what adjustments can be made to soften a boomer’s cash outlay.
"Aside from solely relying on Social Security, looking to downsize your home, moving to a more affordable state, relying on public transportation, and having a robust budget that itemizes discretionary and non-discretionary items are all a good start,” Mark Hebner, president and founder of Index Fund Advisors, Inc., told Investopedia.
“The most important thing is that retirees have the right mindset about their lifestyle in retirement. This is why it is important to start making lifestyle adjustments before you retire."