The explosive peak generation
Before 2019, Sner owned a small business focused on education and development for children. Sner said she could earn enough money from this small business to cover all the daily living expenses of her family, including rent, utilities, food, and other essential expenses. However, when the Covid19 pandemic broke out in 2020, Sner had to close her learning center and lost all income from her business activities. Over the next two years, she could not find any stable job to replace it. Despite trying to find many jobs, this situation plunged her family into financial distress. Sner had to withdraw all her savings and part of the funds from her retirement account, 401k, to cover expenses. Because her husband's income was not enough to support both of them, Sner now has no savings left and worries about the future as she is approaching retirement age. She does not see her financial situation improving in the short term. Sner is part of a group called the peak bombers or those born from 1959 to 1964 who will turn 65 in 2024.
According to a recent report from the Retirement Income Alliance, this peak bomber group includes over 30 million Americans from the post-World War II baby boomer generation. This number indicates that this is the largest group and also the last group of the baby boomer generation to reach retirement age. The report also points out that 52.5% of this peak bomber group have accumulated total assets of less than $250,000. This asset figure could quickly deplete their savings after retirement and force them to rely on very limited social security benefits to live. In Sner's case, with an estimated social security benefit of $1800 per month, it will not be enough to cover basic expenses such as rent, food, and medication. Therefore, she predicts that she will have to continue working after retirement to have additional income. It's a simple calculation, Sner said, to have a relatively stable life after retirement, I need at least about $4000 per month. Just to cover basic expenses like housing, utilities, food, and medical expenses, but with the expected social security benefit of only about $1800 per month, it is too low and cannot meet my needs.
In fact, many other elderly people in the US are facing similar situations. According to the US Census Bureau, more than half of Americans over 65 have annual incomes below $30,000. This means they have to rely on relatively limited social security benefits to live. Furthermore, with the forecast that the social security fund will be depleted by the end of the 2030s, without intervention from policymakers, Sner is worried about her future. She shared that living expenses are very high, to continue working independently, I need internet, mobile phone, and office rental expenses. Although I can still deduct these expenses for tax purposes, I still have to pay all these expenses upfront.
The fear of those approaching retirement
Despite Sner's many years of experience, she still struggles to find a full-time job that suits her. Despite applying for dozens of positions, the only full-time jobs Sner found required high physical fitness. For example, working at a grocery store, a job she could not handle due to limited health. Sner shared that many of her peers of the same age are also facing similar situations. They cannot find jobs that match their experience and qualifications or are forced to accept low-paying jobs. At the entry level for newcomers, she noted that currently the only places hiring older people are stores like Home Depot and Walmart. I advise friends of the same age that if they have a good job, they should stick with it long term because it is very difficult for anyone to hire older people like us.
According to an article by Aarp in October 2023, age discrimination often prevents older people from finding jobs that match their experience and qualifications. Aarp also cited a survey by Theharispo, showing that 60% of hiring managers prefer to hire older people for low-level positions because they are considered more reliable. However, with low wages and sometimes health requirements, this is often not the ideal choice for those approaching retirement age like Sner. According to the results of a survey by Aarp released in January 2024, every year an elderly person in the US, there is one person who has no savings at all for retirement. More than half of those surveyed admitted they did not think they would have enough money to sustain their lives after retirement. Sner expressed her concern, people of my age all feel a bit anxious, I know many people of my age do not know what to do after retirement. Other countries have good care policies for their elderly, and I think the US should be able to do the same.
Negative impact on the US economy
Starting in 2024, over 30 million Americans from the baby boomer generation born between 1959 and 1964 will officially reach the age of 65. The report indicates that many people in this peak bomber group are facing significant economic challenges. This is seen as a slow retirement bomb for the Baby Boomer generation and it could put serious pressure on the remaining workforce in the economy. Robert Shapiro, author of the book "Never Before in America" and former US Deputy Secretary of Commerce responsible for economic issues, stated that over half of the peak bomber generation will struggle to meet their financial needs after retirement. In addition to maintaining their current standard of living, they lack stable sources of income such as pensions or savings that many older baby boomers have. The retirement wave of the peak bomber generation could also have a negative impact on the US economy. The report predicts that employers will have to replace up to 14.8 million workers from this generation, mainly in the healthcare and education sectors. This could reduce the overall labor productivity of the economy, and the retirement of the peak bomber generation could also affect consumer spending. According to consumer spending survey data, this group is expected to reduce spending by over $204 billion in 2032 compared to 2022. The transportation sector is the most affected, but the report also notes that younger workers may take on some jobs that the peak bomber generation leaves behind, and labor productivity could be improved through technological advancements.
Changes in how Americans save
The baby boomer generation began entering the workforce at a time when retirement policies were transitioning from defined benefit plans like pensions to defined contribution plans. These plans typically ensure a stable income by having employers contribute to defined contribution plans like 401(k), depending on the employee's contribution ability. Among the various retirement savings options analyzed in the report, defined benefit pensions show the least disparity in terms of race, gender, and ethnicity. However, only 24% of the baby boomer generation enjoy this type of pension, and even defined contribution retirement plans are facing budget shortfalls. Many elderly Americans are currently living on very limited incomes, with over half of the population over 65 earning less than $30,000 annually. According to the US Census Bureau's population survey, the majority live on incomes ranging from $10,000 to $19,000 per year. Based on data from the Census Bureau, 79.2 retirees receive some form of social security benefits.
Many elderly Americans, including the peak bomber group, have shared with Business Insider that they are forced to work until they die or exhaust themselves just to survive. 68-year-old Palm Toreno said that only the very wealthy have value in old age, while the rest of us can only pray that we can die while still working. Because no one wants to die on the street, Palm said she is still working part-time as a therapist but admits she is slowing down. Fatigue is an inevitable part of the aging process, she recalled that her late stepfather received a fairly large pension when he retired, something increasingly rare today.