Don’t blame Boomers for savings shortfall
As Baby Boomers enter their traditional retirement years, many are faced with not only less in savings than they would like or need, but also annoying public lectures from experts and politicians about how it’s all their fault. Public service announcements tell Boomers and younger generations that they need to stop wasting money on life’s little pleasures now and save more for tomorrow. Politicians tell them they need to work until age 69 or more to receive Social Security pensions because they are living longer than the government planned for.
Saving is an important part of retirement planning. However, these admonitions commit the ultimate attribution error: blaming individuals without taking into account the situation. The contributing factors outside of their control are ignored.
The economy increasingly has relied on a contingent workforce of part-time, contract and temporary employees. Along with layoffs, downsizing and frequent job changes, it’s no wonder Boomers are less likely than earlier generations to have companypaid vested pensions or even 401(k) employer contributions.
Sometimes, companies laid off workers or closed just before employee pensions would have been vested. Stagnant or lower wages, high individual health insurance premiums and increased job insecurity over this period have also made it more difficult for workers to set aside money for a distant future while still getting by in the immediate present.
As a Boomer myself, I have ex- perienced some of this.
Like Prince William and Malia Obama, I took a “gap” year before entering college. In fact, I took two. Those years at a large corporation gave me work experience and some opportunities to travel but resulted in no vested retirement benefits.
Much later, a cancer diagnosis redirected my income toward treatment costs not covered by my insurance. Cancer had a way of forcing the focus away from a distant retirement that might never happen toward the here and now of basic survival. I know I am likely to live long enough to retire, but I also realize it will not be at 65, the traditional retirement age of my parents.
Approaching that onetime milestone, the Baby Boomer runs up against the reality of older age requirements for Social Security — 66 or 67 to get full benefits, 70 for the maximum monthly amount.
He also finds himself in a work world of ageism, underemployment that drives the effective unemployment rate up to nearly 10%, and a diminished supply of full-time high-paying jobs with benefits — all trends accelerated and intensified by the Great Recession and its massive layoffs.
It has become a gig economy, and a toxic one at that. The situations Boomers have had to face in this changing economy, and the decisions they made at each step along the way, have conspired to leave even frugal, debt-free savers with smaller retirement nest eggs than they need.