“Baby boomer” refers to the generation born between 1946 and 1964. This group makes up a significant portion of the world’s population, notably in developed countries. They have had and continue to have a profound impact on the economy, culture, and societal norms.
Key Takeaways
- Definition: The term “baby boomer” identifies individuals born post-World War II until the mid-1960s.
- Economic and Political Influence: During their peak working years, boomers enjoyed a prosperous economy, contributing to their continuous economic and political influence.
- Retirement Challenges: Numerous boomers now face financial challenges as they transition into retirement.
Baby Boomer Facts and Figures
The baby boom phenomenon emerged in the wake of World War II, marked by a substantial spike in birth rates globally. In the United States alone, 76 million babies were born during this era. Despite the inevitability of demographic attrition, immigration has helped maintain a strong boomer population, estimated at 71.6 million by late 2019 according to the U.S. Census Bureau.
Historians attribute the boom to several factors: a delayed desire to start families due to wartime and the Great Depression, coupled with the post-war optimism for a peaceful and prosperous future. This era saw burgeoning wages, flourishing businesses, and a growing variety of consumer products available. The prosperity led families to migrate from city centers to suburban areas, facilitated significantly by the G.I. Bill, which afforded many veterans the chance to buy homes.
As consumer credit expanded, baby boomers influenced the markets even as children, targeted by advertisers and marketers. This economic clout continued to grow as they matured, resulting in considerable consumer power.
The longevity economy illustrates this impact: in 2020 alone, baby boomers spent $8.7 trillion on goods and services, with projections climbing to $15 trillion by 2030.
Key Statistics
53.2% - This figure represents the personal net worth held by baby boomers in early 2023, showcasing their sustained economic role.
Baby Boomer Retirement: A New Era
The transition into retirement for baby boomers started in 2011 when the first of this generation turned 65. By 2029, all boomers will have reached retirement age. Their retirement experiences, however, are significantly different compared to previous generations.
Increased Longevity
Boomers benefit from higher life expectancy compared to previous generations. Today, a 65-year-old American man can expect to live another 16.9 years on average, and a woman can expect 19.6 additional years. Many will reach their 90s or even century marks due to advancements in healthcare. Gulf in longevity suggests more years in retirement, whether financed through continued employment, income savings, or pensions.
Shift From Traditional Pensions
During their careers, many boomers witnessed a shift from traditional defined-benefit pensions to defined-contribution plans, like 401(k)s. A significant number of boomers now rely on personally contributed retirement plans rather than employer-funded pensions. This shift marked a considerable responsibility transfer to employees to strategically plan for retirement.
In 1975, 27.2 million private-sector workers benefitted from defined-benefit pensions, a figure that sharply declined to 12.6 million by 2019. At the same time, those on defined-contribution plans increased dramatically to 85.5 million.
By 2020, only 58.1% of baby boomers aged 56 to 64 had any retirement account. The estimated median value of these savings for those who did is $289,000, and approximately 41% expect to rely primarily on Social Security benefits.
Social Security Uncertainty
Social Security funding remains a concern for many boomers. The system’s sustainability depends on the Old-Age and Survivors Insurance Fund alongside contributions from the current workforce. Current estimates suggest the trust fund might deplete by 2033, leading to potential benefit cuts. Reducing benefits, raising worker contributions, or delaying retirement age will require addressing these solvency concerns.
Historical Context: Naming the Boomers
The term “baby boom” originated post-World War I in England and found prominence in U.S. discourse following World War II, notably boosted by a 1950 article by economic column Sylvia Porter. The expression “baby boomer” emerged in the 1970s, gaining widespread use thanks to Landon Y. Jones’ 1980 book ‘Great Expectations: America & the Baby Boom Generation.’
Related Generations
Echo Boomers
Echo boomers, born from 1976 to 2001, are the children of baby boomers. They span across Gen X, millennials, and Gen Z.
Generation Jones
GenJones refers to boomers born between 1954 and 1965. This sub-cohort identifies with distinct experiences and cultural shifts sparking their disparate classification from early boomers.
Final Thoughts
As baby boomers continue to transition into retirement, they sustain formidable societal and economic influence. The complexity of their challenges underscores the crucial facets of adaptable financial planning and social policies aimed at supporting this pivotal generation.
Related Terms: Silent Generation, Greatest Generation, Generation X, Generation Y, Millennials, Generation Z.
References
- U.S. Census Bureau. “2020 Census Will Help Policymakers Prepare for the Incoming Wave of Aging Boomers”.
- Harvard Business Review. “Generations Around the Globe”.
- Pew Research Center. “Millennials Overtake Baby Boomers as America’s Largest Generation”.
- Population Reference Bureau. “Just How Many Baby Boomers Are There?”
- Smithsonian American Art Museum. “After the War: Blacks and the G.I. Bill”.
- Smithsonian National Museum of American History, via Internet Archive Wayback Machine. “World War II: Peace”.
- The Brookings Institution. “The Silver Economy Is Coming of Age: A Look at the Growing Spending Power of Seniors”.
- Board of Governors of the Federal Reserve System. “DFA: Distributional Financial Accounts: Distribution of Household Wealth in the U.S. Since 1989”.
- U.S. Centers for Disease Control and Prevention. “Provisional Life Expectancy Estimates for 2021”, Page 2.
- Congressional Research Service Reports. “A Visual Depiction of the Shift from Defined Benefit (DB) to Defined Contribution (DC) Pension Plans in the Private Sector”, Page 1.
- U.S. Census Bureau. “Who Has Retirement Accounts?”
- Transamerica Center for Retirement Studies, via Transamerica Institute. “Post-Pandemic Realities: The Retirement Outlook of the Multigenerational Workforce: 23rd Annual Transamerica Retirement Survey of Workers”, Pages 97 and 102.
- U.S. Social Security Administration. “Social Security Board of Trustees: Projection for Combined Trust Funds One Year Sooner than Last Year”.
- U.S. Social Security Administration. “Ratio of Social Security Covered Workers to Beneficiaries, Calendar Years 1940–2013”.
- U.S. Social Security Administration. “Fact Sheet”, Page 2.
- U.S. Bureau of Labor Statistics. “The Labor Force and Unemployment: Three Generations of Change”, Page 36 (Page 3 of PDF).
- Generation Jones. “About”.
