The first of the baby boomers began their careers during a time of Summer of Love, Woodstock and a feeling they would change the world for the better. The last of the boomers began their careers during Reagan-era prosperity, a thawing in the Cold War and optimism the world had already changed for the better. But as 77 million members of the generation born between 1946 and 1964 move toward retirement, are they better off than their parents were at the same point of their lives?
"What we found was that women's increased employment is saving the boomers," says Richard Johnson, director of the program on retirement policy at the Urban Institute, a Washington, D.C.-based research and policy center. Johnson is co-author of a report that analyzes how boomers will fare in retirement. The report, "Boomers' Retirement Income Prospects," concluded that most boomers will eke out a retirement equal to that of their parents, but they face more unknowns and risks than the generations preceding them.
"If women had not worked as much over the past 20 years as they did, boomers would end up doing much worse than previous generations," Johnson says. "But because women are working so much more, we expect they'll do about as well in retirement as previous generations."
While there is still a gender pay gap, it has narrowed, but that is not all good news. "Men's earnings have declined overall, adjusting for inflation, for the past 30 years," Johnson says. "The husbands are not doing as well as in the past, but what the women are bringing to the table is offsetting that decline."
And while boomer women have earned more and have more assets such as 401(k)s than women of previous generations, they will still bear a higher burden of health-care costs in retirement. "Women tend to provide these costs for their husbands," Johnson says. "Typically, when a man becomes frail, his wife takes care of him, but a woman doesn't have that luxury because her husband often dies first."
As for Social Security, Johnson says it will remain an important part of boomers' retirements. He recommends putting off collecting as long as possible to maximize the payout, even if it means using money from a 401(k) first. And boomers may be following that strategy. In a separate report, Johnson found that those turning 62 last year applied for early Social Security benefits at the lowest rate since 1976.