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1. Inadequate retirement savings

Unfortunately, many baby boomers have retirement account balances that are far too small. Boomers were born between 1946 and 1964, meaning they are between 60 and 78 years old in 2024.

They should have a big nest egg to fund their retirement since most have already left the workforce or are about to do so. But all too often, this is not the case.

Let’s take a look at the numbers.

According to Vanguard's How America Saves report, the average account balance in the company’s defined contribution plans (401(k), 403(b) etc.) of those ages 55 to 64 was $207,874 in 2022. For those 65 and up, the average balance was slightly higher at $232,710.

Median balances were $71,168 for those 55 to 64 and $70,620 for Americans 65 and up. Averages are clearly driven up by some rich retirees with big accounts.

Even using the more generous numbers, however, an account worth $232,710 will only provide $9,308.40 to spend a year at the safe withdrawal rate. That's based on the 4% rule, which suggests that you're unlikely to drain your account if you cap withdrawals at 4% of your balance in the first year of retirement and increase withdrawals based on the inflation rate thereafter.

If you consider the average monthly Social Security benefit was $1,907 in January, or $22,884 per year, and the Vanguard data, the typical retired senior would have around $32,000 to spend per year. That's not enough to fund a dream retirement or, for many, to even cover the basics.

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2. Changes to Social Security

Speaking of Social Security, some changes to the program have made it even harder for boomers to make ends meet.

For one thing, most are looking at a full retirement age that's later than that of retirees who came before them. While retirees could previously get full benefits at 65, today those born in 1960 or later are required to wait until age 67 to receive an unreduced check.

This means retirees either must wait longer to claim benefits or commit to getting less monthly income for life.

Until 1984, benefits were exempt from federal income tax. Today Social Security benefits are taxable if your combined income (50% of your benefit amount plus any other earned income) exceeds $25,000/year filing individually or $32,000/year filing jointly.

Because these thresholds were not indexed to inflation, they don't increase over time. So, while fewer than 10% of retirees originally owed these taxes, the number may be close to 50% now according to the Senior Citizens League. This is in line with a projection from a 2015 study by the Social Security Administration. That's a lot more seniors losing some of their much-needed money to the government.

Lastly, Social Security is expected to run out of funds in 2035. At that point, retirees will start receiving only around 80% of their promised benefits unless Congress takes action.

3. Increasing debt

Finally, more boomers are carrying debt into retirement than previous generations, causing an increased drain on their limited resources.

In the 1980s, around 38% of U.S. households over 65 carried at least some debt. That number was is up to 63%, according to the Center for Retirement Research. In 2022, 64.8% of U.S. households of adults ages 65 to 74 were carrying debt, according to the Survey of Consumer Finances.

Retirees are burdened with all different kinds of debt now. As the National Council on Aging reports citing the Consumer Financial Protection Bureau, in 2020, close to four million adults aged 65 and over had unpaid medical bills.

Debt makes living on a limited income more challenging, leaving many boomers facing hard trade-offs, such as foregoing home or car repairs; cutting prescription pills in half to save on costs; and even skipping meals, according to the National Council on Aging.

For boomers facing these challenges, being proactive is key to preserving retirement security. Downsizing to cash-in home equity, moving to a low cost area and shopping carefully for the right Medicare plan can help.

For those still in the workforce worried about their future economic stability, working longer to save more — and delaying the start of Social Security — could also make a difference.


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Christy Bieber Freelance Writer

Christy Bieber a freelance contributor to Moneywise, who has been writing professionally since 2008. She writes about everything related to money management and has been published by NY Post, Fox Business, USA Today, Forbes Advisor, Credible, Credit Karma, and more. She has a JD from UCLA School of Law and a BA in English Media and Communications from the University of Rochester.


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