The Ripple Effect of Baby Boomer Retirement

From my US News & World Blog

The baby boomers have already begun to enter retirement age, and the decisions they make could have profound implications for the economy, health care system, and future generations of retirees. Today, approximately one in eight Americans is age 65 or older. By 2030, one in five people will be considered a senior citizen. And the number of baby boomers age 85 and older will expand to an estimated 21 million by 2050. Here is how this new age mix in America’s population will impact society:

The nature of the work force. The ratio of working-age citizens between ages 15 and 64 supporting those age 65 and older is currently five to one in the U.S. By the year 2050 this ratio will drop to three to one. With fewer people available to hire, expect to see more seniors in the workforce. Smart companies will take advantage of the skilled pool of older workers who are willing and able to contribute. And that seems to be just fine with retirees, since 74 percent expect to continue working in some capacity beyond retirement, according to a recent Wells Fargo survey.

Less money going to charities. Many baby boomers who haven’t saved enough could end up struggling financially in retirement. Those who are having difficult simply paying everyday bills will probably not have much left over for contributions to charities. Many people whose steady incomes allowed them to give money to worthwhile charities may need to cut back once the move is made into retirement. At a time when so many need help, otherwise generous seniors may have to take care of themselves first.

Challenges across the health system. Increasing numbers of older Americans will put a greater strain on the existing health systems. If we take a look at just one area, Alzheimer’s disease, we can get an insight into the impact aging baby boomers will have. There are currently 5.4 million Americans of all ages suffering from the disease, with payments for care estimated to be $200 billion, according to the Alzheimer’s Association. By the year 2050, more than 15 million people could have the disease.

The nature of investments. While they were working full time, baby boomers often invested for long-term growth and were more accepting of risk in exchange for a higher potential return. Once they retire, baby boomers may want to decrease the risk in their investment portfolios. With limited time horizons and fixed incomes, seniors need to be more cautious and their choice of investments will need to change. As baby boomers start to pull their wealth out of the stock market it could have implications for financial institutions and even the overall economy.

Exercise and recreation. Many fitness centers cater to a young crowd with high-intensity programs designed to improve endurance and get maximum results in a short period of time. Although baby boomers have typically been health conscious, the nature of their exercise regime will change as they age. Fitness centers will need to change the mix of their offerings, and instructors will need to become familiar with the challenges and limitations caused by aging as they prepare routines for their clients. Expect to see seniors continuing to work out for their good health, and plan on seeing a bit more gray hair in your Zumba class.

Dave Bernard is the author of I Want To Retire! Essential Considerations for the Retiree to Be. Although not yet retired, he focuses on identifying and understanding the essential components a fulfilling and meaningful retirement. He shares his discoveries and insights on his blog Retirement-Only The Beginning.

2 thoughts on “The Ripple Effect of Baby Boomer Retirement

  1. Hi David, As I read your blog, I thought about growing up in the fifties in the first wave of babies boomers. As men returned from the war, got married and started families, our world wasn’t prepared for the onslaught of children. We moved to the burbs in 1960, where I entered into a brand new elementary school, followed by a new junior high school. Unprecedented growth was followed by difficult economic times, extreme inflation, etc. Now, baby boomers will help change the world again. We can not exist in a retirement model that has existed since the early sixties when the concept of the ‘Golden Years’ was created. Writers like you and educators, like me will hopefully open the dialogue on both the personal and policy levels to create a time that can be a benefit to society and not a drain.

  2. You are quite right Cathy – this retirement is not our parent’s retirement. So many big changes and the incredible size of our Boomer generation hitting the retirement stage of life at the same time will dramatically impact everything from medical care to travel to housing. Hopefully if we can prepare as best we can ahead of time we will be able to get there and realize a fulfilling retirement – but there are no guarantees…