The Baby Boomer Generation
They refer to people who were born between 1946 and 1964 during the mid-20th century baby boom. This demographic cohort follows the Silent Generation and precedes Generation X.
Baby boomers were born during a period of significant population growth after World War II. Their childhoods in the 1950s and 1960s were marked by substantial reforms in education, influenced by the Cold War and the interwar period. They experienced economic prosperity and rapid technological progress during their formative years.
As this large cohort entered their teens and young adulthood in the 1960s and 1970s, they shaped specific social movements and rhetoric. The counterculture of the 1960s was a product of their size in numbers. In many countries, this period coincided with deep political instability due to the post-war youth bulge.
Baby boomers in China lived through the Cultural Revolution and were affected by the one-child policy as adults. Their impact on society led to the increasing tendency to define the world in terms of generations. Physiologically, they reached puberty and maximum height earlier than previous generations.
In Europe and North America, many boomers grew up during a time of increasing affluence. They benefited from widespread government subsidies in post-war housing and education. Boomers generally expected the world to improve over time.
In some developed countries, baby boomers are currently the single largest cohort due to sub-replacement fertility and population ageing. In the United States, they constitute the second most numerous age demographic after millennials.
Overall, the baby boomer generation has left a lasting impact on culture, politics, and societal norms, shaping the world in which we live today.
Retirement Acceleration:
Since the onset of the COVID-19 pandemic, the pace of Baby Boomer retirements has increased significantly. In the third quarter of 2020, approximately 28.6 million Baby Boomers reported being out of the labour force due to retirement. This number is 3.2 million more than the retirees in the same quarter of 20191.
As baby boomers retire in substantial numbers, the global workforce faces significant challenges. The surge in retirees is outpacing the influx of new workers, leading to an unparalleled ageing of the population. This transformation impacts the workforce, economy, and the global mobility industry1.
Key Implications of Increased Baby Boomer Retirements
Labour Market Gaps: The number of retirees is growing rapidly, reducing workforce participation. During the third quarter of 2020, approximately 28.6 million baby boomers had retired, and this trend continues. The demand for workers remains robust, with about two job openings available for every unemployed individual. Employers must plan strategically to replace existing workers.
Skills Gap: Relying solely on Gen X workers is insufficient, and many millennials may lack essential work experience. Additionally, not all roles are suitable for flexible or remote workers. To bridge the skills gap, organizations can explore diverse sources, including global mobility programs, to enhance employee retention rates in the long run.
Labour Shortage: The retirement wave creates a forever labour shortage. Workers can anticipate higher salaries due to fierce competition for their skills and expertise. Policymakers must act swiftly to ensure everyone benefits from this historic change.
Economic Impact: Baby boomers’ retirement affects the economy. Surprisingly, only about 58% of Boomers have a retirement account. The average baby boomer surveyed had $920,400 saved for retirement, but the actual savings balance of most retirees is lower. The median 65-year-old retiree has just $58,035 in savings3.
Healthcare Concerns: There is a 50% chance that a Boomer will not be able to afford healthcare in old age. Considering their life expectancy, which is around 79 years old, planning for healthcare costs becomes crucial.
Perceptions of Aging: Interestingly, the typical Boomer believes that old age does not begin until age 72. Additionally, while about half of all adults feel younger than their actual age, 61% of Boomers feel more spry than their age would imply.
In summary, the retirement of baby boomers has far-reaching consequences, requiring innovative workforce planning and adaptation to changing demographics. They are navigating retirement with varying financial situations and diverse perspectives on ageing.
Strategies for Boomers in Securing a More Comfortable Retirement:
Maximize Retirement Savings: If eligible, encourage Boomers to take advantage of catch-up contributions to their retirement accounts. The IRS allows additional contributions for those aged 50 and above. Suggest delaying Social Security benefits if possible. Waiting until full retirement age (or even later) can lead to higher monthly benefits. Consider working beyond the traditional retirement age. This allows for continued income and additional savings.
Evaluate Existing Savings: Encourage Boomers to consult a financial advisor. Advisors can assess their situation, ask relevant questions, and create a retirement plan. Evaluate investment portfolios, income potential, and available programs. Adjust as needed to improve the overall financial picture.
Debt Management: Help boomers prioritize paying off high-interest debt. Reducing the debt burden frees up funds for retirement savings.
Encourage Saving: Despite pensions, encourage consistent saving. Additional contributions and investment growth can enhance their nest egg.
Remember, it’s never too late to take control of financial well-being. By adopting prudent habits, seeking professional advice, and remaining flexible, Baby Boomers can improve their chances of a comfortable and secure retirement1