The retirement of “Peak Boomers” will hit America like an earthquake, depressing GDP and consumer spending as a majority of them are financially unprepared for retirement.
That’s the assessment of Robert J. Shapiro, former undersecretary of commerce for economic affairs, in a study commissioned by the Alliance for Lifetime Income. Turning 65 between 2024 and 2030, the 30.4 million Peak Boomers are America’s biggest cohort to hit retirement age. The economic impact of their retirement will be profound.
Median retirement savings for all Peak Boomers is $225,000:
- 52.5% have $250,000 or less, so they’ll rely mainly on Social Security for income.
- Another 14.6% have assets of $500,000 or less.
There are stark differences in median savings among groups:
- $269,000 for men, $185,000 for women.
- $299,000 for Whites, $123,000 for Hispanics, $49,000 for Blacks.
- $591,000 for college graduates, $75,000 for high school graduates, $7,000 for those without high school diplomas.
Defined benefit pensions are held by 24% of Peak Boomers. Median public pensions are $25,450, 44% greater than the $17,640 for private ones.
Peak Boomers fill 10% of U.S. jobs, so their retirement will have big economic impacts:
- Employers will have to replace between 10.8 million and 14.8 million Peak Boomer workers, reducing productivity by 0.9% to 1.3%.
- The retirements will reduce GDP growth by 7.3% by 2030.
- Peak Boomer consumer spending will decline 15.3%, hitting sectors including transportation, utilities, wholesale trade and real estate.
- Their draw Social Security and Medicare will add $347 billion to entitlement spending by 2030. Mortality will offset added costs: 61% for Social Security and 58% for Medicare.
