Members of the baby boom generation have to worry not only about saving for retirement but also about outliving what savings they have.
Witnesses delivered that message here earlier this week at a hearing of the Senate Special Committee on Aging.
The issue of retirement savings–or lack thereof–is not a new one, and 2005 marked the first year since the Great Depression that the nation’s savings rate was a negative percentage for an entire calendar year. The personal savings rate remains negative, according to the committee chairman,
Sen. Gordon Smith, R-Ore., the committee chairman, noted that the U.S. personal “savings” rate was negative 1.6% in April, meaning that consumers were drawing on their savings rather than adding to their savings.
“There are about 77 million baby boomers,” said Ben Stein, a television personality and financial columnist who is the honorary spokesperson for the National Retirement Planning Coalition, a group of 13 financial and health care industry organizations founded by the National Association for Variable Annuities, Reston, Va. “Their average savings are far below what is needed for a comfortable or even decent retirement.”"
The average baby boomer family has roughly $50,000 in liquid assets when members retire, and “that’s not even remotely close [to what is needed],” Stein said.
C. Robert Henrikson, chairman of MetLife Inc., New York, said seniors are in dire straits when facing retirement.
Although Americans are living longer on average, many “will not live long and prosper,” Henrikson said.
Although many Americans use 401(k) plans to save for retirement, the plans “have not yet proved to be successful, which means providing income and security for an entire generation,” Henrikson says.