Growing Old, Baby-Boomer Style
Experts examine the impact on U.S. society as aging baby boomers move closer to retirement.
Will Boomers Keep Working?
If boomers remain vigorous and healthy as they age, they could make
tremendous contributions to American society.
For one thing, they could remain in the workforce. With American women
having an average of just over two children -- just enough to maintain the
population -- the workforce will no longer grow as fast as in previous years. A
smaller workforce means that economic growth will slow from the typical 2% a
year that has prevailed since World War II.
A 2% annual growth rate is very vigorous, however, so a slight slowdown
would still produce a rising standard of living for Americans.
"It would just increase more slowly than the past," says Burtless. "I wrote
a book a few years ago called Can America Afford to Grow Old? And the
answer is yes. We haven't reached the end of improved living standards just
because the population is getting older."
If large numbers of boomers remain in the workforce, they will give a
significant boost to economic growth.
"If even 5 million baby boomers work instead of retiring, at an average wage
of about $50,000 a year, that would add $250 billion to the economy every
year," says Peter Francese, founder of American Demographics magazine and a
demographic trends analyst for the Ogilvy and Mather advertising agency.
Can Boomers Afford to Retire?
And a lot of boomers say they intend to work beyond the traditional
retirement age of 65, primarily because 30% to 50% say they have not saved
enough to retire.
"Boomers who retire at 65 need to have enough money to support themselves
for 20 to 25 years," said Francese. "You run that model back and you'd better
have $2 to 2.5 million in the bank. When baby boomers do that calculation, a
lot of them decide they'll keep working."
Many boomers seem to have done that calculation. In a recent AARP survey,
"Boomers at Midlife," 23% of boomers said the worst aspect of their life was
personal finances. Only 58% believed they could meet their financial goals for
Not surprisingly, a survey conducted by Merrill Lynch found that nearly 80%
of boomers intend to keep working beyond age 65.
And they should be able to find plenty of work, economists say, since the
U.S. will face a labor shortage of up to 10 million workers by 2010 because of
a smaller pool of younger workers.
Besides, baby boomers don't think retirement is cool. Boomers in a focus
group organized by the North Carolina Center for Creative Retirement Planning
said retirement didn't fit their self-image. One focus group member said
retirement means "sitting around and doing nothing." Another said retirement
means "it's time to reinvent myself."
David DeLong, DBA, a researcher at MIT's AgeLab and the author of Lost
Knowledge: Confronting the Threat of an Aging Workforce, expects that
employers eventually will welcome boomers back into the workforce.
"A MetLife study last year found that more than half of preretirees expect
to supplement their retirement income, but only 12% who were already retired
have actually worked," DeLong tells WebMD. "This suggests that the expectations
boomers have about post-retirement work may be unrealistic. But I also believe
that we're going to reach a tipping point where organizations will suddenly
realize there aren't enough young, skilled workers out there, and they'll get
more creative about recruiting older workers. So many boomers will continue to
work, and they're going to work on their own terms."