These include white papers, government data, original reporting, and interviews with industry experts. That kid who worked two paper routes in 1965 would have been well-positioned to cash in on the dotcom boom of the 1990s at the peak of their earning years. One is that many boomers haven’t saved up enough money to afford maintaining their lifestyle in retirement. Baby boomers as a segment of the population have not saved enough money (where money is a representation of work) over their working life to give themselves an adequately similar lifestyle over their retirements. Photo credit: © iStock.com/FluxFactory, ©iStock.com/monkeybusinessimages, ©iStock.com/bernardbodo. Boomer Effect (Baby Boomer Factor) Definition. 2020 Census Will Help Policymakers Prepare for the Incoming Wave of Aging Boomers, The Baby Boom Cohort in the United States: 2012 to 2060, Civilian Labor Force Participation Rate, Seasonally Adjusted, Majority of Americans Say Parents Are Doing Too Much for Their Young Adult Children, A majority of young adults in the U.S. live with their parents for the first time since the Great Depression, Older Workers: Labor Force Trends and Career Options. "A majority of young adults in the U.S. live with their parents for the first time since the Great Depression." Accessed Oct. 19, 2020. Indeed, a 2015 report from the Social Security Administration (SSA) states that the OASDI trust is projected to run out in 2033 if no adjustments are made. Even now, the generation that coined the phrase “live to work” is living up to its reputation. A lot of people may be working well … After enjoying childhoods during the high-growth and economically stable decades following World War II, they rode the crest of relative prosperity into middle age with just a handful of economic blips, like the 1979 energy crisis and the early 1980s recession. Related to this is that the average life expectancy continues to rise. Part of their success comes down to luck: Economically speaking, they were born at the right time. In 2031, the U.S. population over the age of 65 will number 75 million, almost double what it was just 23 years prior in 2008. This means that millions of people are approaching retirement without any savings to speak of. In 1971, the economy of Seattle was suffering. Census Bureau. Their neverending work ethic affects the economy greatly. However, the continued aging of this generation will be felt across every aspect of the economy, from healthcare to technology to the housing market. Music icons Patti Smith, Carlos Santana, and Steven Tyler all share one thing in common—and it’s not just rock and roll. They’re baby boomers, the longest-living generation in the history of the United States. Statistics New Zealand estimates that the 65-plus population is already at 746,500, or 15 per cent of our population. As more and more boomers elect to begin receiving Social Security benefits, many people can’t help but adopt a fatalistic view of the financial health of the fund. Such a huge demographic shift promises to transform the economy. America's Baby Boomers have dominated the US economy for more than a quarter-century. In ten years, it’s estimated more than 20% of Canadians will be of retirement age. The last of them will reach full retirement age in 2031. "Many Baby Boomers Reluctant to Retire." This is part of the Globe and Mail's week-long series on baby boomers and how their spending, investing, health and lifestyle decisions could affect Canada's economy in the next 15 years. It's a great question that would need an entire book to properly answer. The labor force participation rate is a measure of an economy’s active workforce. As members of the baby-boom cohort—individuals born in 1946 to 1964—approach retirement age, their economic well-being at retirement is of particular concern to policymakers. In 2008 the first baby boomers reached age 62, which is the earliest you can elect for Social Security retirement benefits. Retirement for this cohort is as inevitable as the boomerang effect that will eventually create job availability. Boomers have accumulated incomes for the very wealthiest Americans, withered the middle class, and, through unconcerned borrowing and irresponsible financial engineering, driven the economy into the worst recession in 80 years (Tankersly, “The Case Against the Baby Boomers”). Thousands of baby boomers reach retirement age every day and, by 2031, the country will include 75 million seniors. "2020 Census Will Help Policymakers Prepare for the Incoming Wave of Aging Boomers." Accessed Oct. 19, 2020. When it runs out, the SSA projects that tax revenue will be able to foot the bill for 77% of benefits. A report from the Stanford Center on Longevity states that almost one third of baby boomers had no retirement account as of 2014. Based on a 2000 United States census, the Baby boomer generation is a population of roughly 83 million. The baby boomer age wave theory says that the markets and consumer spending would decline once the baby-boom generation surpassed age 50. Pew Research. They have to prepare solutions to deal with the problems caused by a depleted work force. It’s important to keep in mind, though, that Social Security benefits max out at age 70 – a milestone that the first boomers have begun to hit. 16% of the population is now over 65, or what used to pass for retirement age. Accessed Oct. 19, 2020. By that year, nearly one-fifth of the U.S. population will be 65 or older, and during the 18-year period between 2011 to 2029, about 10,000 baby boomers are expected to reach the age of retirement age each day. Two good ones from the Canadian perspective are … A popular rule of thumb is that you’ll need about 80% of your pre-retirement income to maintain your current lifestyle. Boomers make up 27% of the population, up from 18% two decades ago. While baby boomers are working longer, their inevitable retirement will have widespread effects on the American economy. Jim Barnash is a Certified Financial Planner with more than four decades of experience. Expect high impacts on consumer spending, as retirees not only produce less but also consume and spend less. The first members of this generation reached retirement age in 2011, and the continued departure of baby boomers from the labour force is impacting the economy in interesting new ways. Retiring baby boomers are more tech-literate than their parents, and will be taking full advantage of social media and internet-connected devices like tablets, smartphones, and other "smart" technologies. That could mean raising the cap on OASDI taxes (which will only apply to income below $137,700 in 2020); it could mean raising the retirement age once again; it might even mean changing how we calculate cost-of-living adjustments. Whatever happens, the best thing for boomers and non-boomers alike to do is to stick to the personal finance principles that have proven timeless: Save money, invest in a diversified and low-cost portfolio and prepare for any possibility. Congress took action, raising the full retirement age to 67 and implementing taxes on benefits. Here are three ideas: 1. That doesn’t mean that Social Security is likely to go bankrupt. Use SmartAsset’s. Accessed Oct. 19, 2020. What will happen as more than 250,000 Americans celebrate their 65th birthdays each month? Bureau of Labor Statistics. The baby boom generation refers to the 78 million babies born in the U.S. after World War II. Social Security, the job market and consumer spending are just three aspects of the U.S economy that will be affected by the boomer retirement wave. One area where this generation is spending more? The offers that appear in this table are from partnerships from which Investopedia receives compensation. Another looming and potentially huge issue for the U.S. economy is how aging Baby Boomers are expected to stress the healthcare system. 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