Economic Perspective: Financial Challenges For Baby Boomers

NC State College of Agriculture and Life Sciences professor Dr. Mike Walden working in a recording studio.

MARY WALDEN:

“Today’s program looks at financial challenges for boomers. Mike, both of us are baby boomers. Our generation is quickly moving into retirement. Of course there are many challenges associated with retirement, but one of the biggest is financial. On average, how does the baby boomer generation look in terms of being financially prepared for retirement.”

 

MIKE WALDEN:

“There’s good and bad news here. If you look at the baby boomer generation as a whole, it actually looks pretty good. The baby boomers’ generation net worth, that is the value of their assets minus their liabilities is much higher than in previous generations. But, if you go behind those average numbers you do see some problems.”

“First of all you see a lot of baby boomers who were greatly affected by the Great Recession. That is their income went down, some of their asset values went down, particularly their house value. So they actually have not fared very well in recent years, and they’re not faring well compared to previous generations.”

“Another problem is that we see that baby boomers, some again, have taken on more debt, particularly in their home than in previous generations. So that’s weighing down upon them in terms of trying to retire.”

“The last problem is that, experts say, that when we get toward retirement what we want to do is move our investments into safer investments to preserve that principle. You can take chances when you’re younger with higher risk investments, again when you get closer to retirement you generally want to move to safety, but the problem here is that with super low interest rates. And we’ve never seen interest rates this low for an extended period of time in our economy, super low interest rates. What you’re earning on those safe investments is not very high. In fact, when you adjust for inflation it’s actually negative.”

“That’s hurt a fair number of baby boomers in order to plan and get to retirement. So a lot of challenges here. On average things look good, but again for certain parts of the baby boomers things are being challenged for them in terms of getting to retirement.”

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