Alicia Munnell, director of the Center for Retirement Research at Boston College, wrote a piece for Smart Money on Monday that zeroed in on the reasons retirement will be so much riskier for Baby Boomers than their parents and grandparents.
According to Munnell, the current crop of retirees are living in a “golden age” that will fade as Baby Boomers and Generation Xers reach traditional retirement ages in the coming decades.
“Many Baby Boomers and Gen Xers face a significant retirement income shortfall,” she writes. “Even before the financial crisis, almost 45% of working households were projected to be ‘at risk’ [of being unable to maintain their pre-retirement standard of living in retirement]; after the crisis, this level increased to 51%.
Moreover, Munnell (left) adds, the percent "at risk" increases with each cohort. Late Boomers show more households "at risk" than early Boomers, and Generation Xers have even larger numbers "at risk." This gloomy forecast is due to the changing retirement income landscape.
She then lists the four reasons why today’s workers will be retiring in a substantially different environment than their parents:
1. They're living longer – The length of retirement is increasing, as the average retirement age hovers at 64 for men and 63 for women while life expectancy continues to rise. This longer retirement means retirees will likely need more savings than their parents’ did.