Averting a Bust for the Boomers

Most discussion of the impending wave of Baby Boomers entering retirement age focuses on the capacity of entitlement programs to support them. Under-examined is the question of Boomers’ abilities to support themselves and what policy changes might be necessary to help them do so. The ongoing instability in financial markets and its effect on the assets that many Boomers have planned to tap for retirement add to the uncertainty. Macroeconomic developments, workplace norms and existing policy barriers all make the most obvious short-term solution to the problem—working longer and saving more—more difficult than many imagine. An MP3 audio recording can be downloaded below, while video is available at right.

With this as a backdrop, New America’s Next Social Contract Initiative and the McKinsey Global Institute co-hosted, Averting a Bust for the Boomers: The State of Retirement Preparedness and How to Improve It on June 5 at the US Capitol Building. The event featured the official release of, "Talkin' 'Bout My Generation: The Economic Impact of Aging US Baby Boomers."

Chairman Herb Kohl of the Senate Special Committee on aging welcomed attendees with opening remarks that commended the report and its findings and highlighted legislation that he and a bipartisan coalition of Special Committee members have sponsored to remove existing barriers to the continued employment of older workers.

MGI Director Diana Farrell then provided a detailed Power Point summary of the report's methodology and findings. Chief among them is the fact that 69% of older Boomers expected top retire in the next few years are unprepared to maintain their current lifestyle (defined as an inability to spend at 80% of current levels throughout the course of their retirement). The summary also provided an insightful analysis of how the Boomers got to this point and principles for addressing the problem.

Pulitzer Prize-winning business columnist Steven Pearlstein of the Washington Post then moderated a panel discussion on the report. Isabel Sawhill of the Brookings Institution, John Rother of AARP and Next Social Contract Research Director, and NAF Senior Fellow, Phil Longman participated in the discussion.

In commenting on the report, all cited the need to address healthcare costs, which will represent a growing portion of expenses for retired Boomers. In addition, there was general agreement that increasing household savings rates, voluntarily or via mandatory measures, was essential to preventing the trends detailed in the report from becoming an insurmountable reality for Boomers and future generations of retirees.

Participants
Featured Speakers

• Chairman Herb Kohl
  Senate Special Committee on Aging

• Diana Farrell
  Director, McKinsey Global Institute

• John Rother
  Executive Vice President for Policy and Strategy
  AARP

• Isabel Sawhill
  Senior Fellow, Economic Studies and
  Co-Director, Center on Children and Families, The Brookings Institution

• Phillip Longman
  Research Director, Next Social Contract Initiative, and Senior Fellow, New America Foundation

• Steven Pearlstein
  Business Columnist, The Washington Post