Many of the Baby Boomer generation have already retired, and the rest are rapidly approaching that milestone. But a new report suggests some retiring Baby Boomers face a big financial issue when they stop working. NC State University economist Mike Walden explains.
“Usually when you retire, your biggest issue is getting enough money to live on from pensions, Social Security, etc. But a new study from the Federal Reserve shows that current retirees coming from the Baby Boomer generation are facing an additional challenge, and it is that they have not paid off all their debt. Again, the typical plan is you reach retirement, you’ve paid off your debts, you live off your pension and Social Security, and you enjoy life.
“But what recent data are showing is that the Baby Boomers who are retiring have not paid down, for example, debt that they weren’t able to pay down during the Great Recession. And the big difference is they have college debt — this is really what didn’t exist — and they’ve not paid off that college debt.
“So this is a new challenge for the Baby boomers, and it’s really putting many of them in a squeeze because they still face issues with, perhaps, having enough income flowing in, and now they’ve got requirements for spending a substantial amount of that income on paying down on debt. So it will be very interesting to see how this transpires as more Boomers retire.”