6 Reasons I Have Sympathy for Boomers Who Did Not Save Enough for Retirement

Reports continue to come out about the Baby Boomer generation and their retirement. Unfortunately, many of the findings are not encouraging. Many do not have enough money to retire or are running out of money in retirement.

While the initial reaction for some may be, “I told you so,” I have sympathy for this generation and their retirement struggles. Here’s why:

  1. They are the children of the pension generation. Boomers were raised by a generation that primarily relied on pensions for retirement. Few of their parents invested for retirement. So they were neither taught nor saw their parents set aside money for retirement. There was not the barrage of information and warnings about not saving for retirement. Questions like, should you invest in gold? Were not as popular as they are today. For their parents, preparing for retirement meant getting a good job with a pension.
  2. The 401(k) was created in 1978. Boomers did not grow up in a 401(k) world. The Revenue Act of 1978 added a provision, Section 401(k), to the Internal Revenue Code. To state the obvious, this means that prior to 1978, putting money in a 401(k) was not an option. And while the 401(k) was created in 1978, there was another problem…
  3. Not all companies offered 401(k)s right away. The big companies were the first to jump on board. By 1983, about half of large companies offered the plans. So there wasn’t an immediate adoption. This limited the number of years Boomer could participate in these plans, even if they fully understood the importance of the plans. This means that…
  4. Many Boomers missed out on the most their most critical retirement saving years. A little bit of money + A lot of time = A lot of money. Early adult years are some of the most important retirement saving years. This is due to the impact of compounding. Unfortunately, many Boomers were simply late to the retirement savings game.
  5. They are living longer than they expected. Many Boomers have and will run out of money during retirement. Certainly, this can be attributed to a lack of savings. But it also can be attribute to a lack of death. Boomers are living longer, but their expenses are not getting cheaper. In fact, they are experiencing a dramatic rise in medical costs, home care services (check out homecaring.com.au).
  6. They spent a lot of their money on children. Boomers have been known to financially assist their children, even grown children. And while this helped their kids, it hurt their retirement savings.

Of course, none of this solves the problems Boomers are facing. They are still needing to make major adjustments for retirement. But it does provide perspective when reading the negative reports on Boomers and retirement.

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6 thoughts on “6 Reasons I Have Sympathy for Boomers Who Did Not Save Enough for Retirement

  1. Once again, Thom Rainer is helpful to those in the workplace both Secular and Spiritual

    Lord help us as the future is sure to come that men and women will be prepared.

  2. I remember reading a newspaper article in the early 1980s that Social Security would have difficulties in the future eg. in the 202os or 2030s and Boomers should take note of that. I didn’t get much in the way of ‘personal finance’ education at the time, but that article was flagged and something I kept in mind (and acted on) as the years went on. I would add a 7th reason for under saving: the Great Recession that started in 2007 set a lot of people behind because of stock market losses.
    A couple of thoughts: the Boomers started turning 65 in 2011, so approximately 32 million or more have retired, and another 45 million have yet to retire. About one-quarter to one-third of us Boomers will have some difficulty with retirement income (but statistics on this estimate vary widely, and people do down-size their lifestyles). There is a whole new era of ‘an aging population’ Boomer ministry that is opening up, and adequate retirement planning for them is one component of it. Many of these Boomers are living in cities where some of our nation’s needs are greatest. They (we) have a lot to offer younger people. , including a lifetime of accumulated Christian experience and for some, Bible knowledge that can be imparted. What seminaries are now offering courses in how to mobilize, equip , and learning how to work with aging members / aging congregations?

  3. For further clarification on the 403(b) question. . . Should not those pastors who have their retirement funds in a 403(b) plan be sure that it is in a 403(b)(9)?