With more than half of peak baby boomers – those born between 1959 and 1964 – planning to retire within the next five years, a large cohort of silver-age Americans are facing a likely crisis of health and wealth, according to a new study.
The research, conducted by distinguished economist Robert J. Shapiro and Luke Stuttgen of Sonecon, found 55 percent of peak boomers expect to leave the workforce within the next decade. But the actual number may be even higher, as people tend to retire earlier than planned due to unexpected factors like illness, job changes, or simply changing their minds.
The study, commissioned by the Alliance for Lifetime Income’s Retirement Income Institute, warns that the impending Boomer exodus could have profound economic ramifications as it creates significant workforce shortages.
"We are in the early stages of the largest retirement-driven workforce turnover in our nation’s history," Jason Fichtner, executive director of RII, said in a statement. "These retirements have already begun and will continue to have significant impact on our economy."
The analysis, which focuses on 30.4 million Peak Boomers, suggests that 14.8 million Americans are expected to retire by 2029. As a result, US employers may need to hire over 240,000 workers per month just to keep pace with the vacancies.
Among the sectors likely to be most affected on a percentage basis will be healthcare and social assistance, which is projected to lose 9.6 percent of its workforce – around 2.1 million workers – during a time of rising demand for healthcare services driven by the aging population.
That can only add to the struggles of millions of soon-to-be-retired baby boomers. According to previously released findings from Shapiro’s research, two-thirds of these individuals may struggle to sustain their current lifestyles post-retirement.
"A historic surge in retirement age Americans coincides with a historic turnover in workers who serve older Americans, thereby creating a labor gap with far-reaching societal and economic implications," Fichtner noted.
With fewer employer-sponsored pension plans available, the study noted that many middle-class Boomers are increasingly turning to annuities as a source of predictable retirement income.
It highlighted that "most annuity owners are middle-class," with a median household income of $79,000 in 2022. Among households of people that own annuities, 25 percent had incomes below $50,000, and 70 percent had incomes less than $100,000.
“Boomers are the first generation of U.S. workers to retire without a pension plan as a base of retirement income," Fichtner said, noting how once-common pension plans in the private sector have now become a rarity. "As a result, many middle-income retirees are using annuities to generate protected and predictable income in retirement," he said.
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