SOA Effort Explores More Flexible Retirement Systems

The early baby boomers (born 1946-1955) are actually much better off, financially speaking, than are late boomers (1956-1964), says Kessler.

The same can be said for pre-boomers (born before 1946), she says in an interview with NU. And this has implications for the retirement future, Kessler stresses.

The late-boomers, some mid-boomers, plus boomers who are in the lower income brackets will risk seeing their finances fall apart once they hit retirement, she explains.

As for the early boomers, they are better off financially because they had a lot of job opportunities when they entered adulthood, Kessler says. “They drove housing demand. Many were (and are) participants in defined benefit pension plans.” So, during the wealth accumulation stage of their life, they were generally better able to take advantage of growing employment and housing markets, she says.

By comparison, late boomers and low-income boomers face more challenges and a changing retirement system, she says. So do individuals in generation-X. For instance, more of them are participating in defined contribution plans, few participate in defined benefit plans, and many are affected by the global economy.

To date, retirement plan development has focused mostly on tweaking the current plans, Kessler notes. The developers would make incremental changes to existing products, such as DC and DB plans, she says. “But is that enough to meet what needs to be done, the overall social goal?”

The tweaks should help people who are retiring today, including the early boomers, she allows, but the late boomers and the Gen-Xers may well need new solutions, because they face a different retirement future.