It’s All Relative: Understanding the Retirement Prospects of Baby-Boomers

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The aim of this paper is to compare baby boomer retirees with previous generations on their overall level, distribution, and composition of family income and on the adequacy of this income in maintaining their economic well- being in retirement. To do this we use projections of retirement income from the Social Security Administration’s Modeling of Income in the Near Term (MINT) data system.

In absolute terms, measured by real per capita income and poverty rates, we find that baby boomers will be better off than current retirees. In relative terms, however, many baby boomers will be worse off than current retirees. First, MINT predicts changes over time in the relative ranking of important subgroups within specific cohorts, with some subgroups experiencing substantial gains in real per capita income and other subgroups experiencing little gain over time. Second, while both pre- and post-retirement incomes are rising, post-retirement incomes don’t rise as much as pre-retirement incomes. Consequently, baby boomers are less likely than current retirees to have enough post-retirement income to maintain their preretirement living standards. These findings hold up to various definitions of family income and replacement rates.