Retirement Picture for Early Boomers not that Bad

In addition, the brief released by the Center for Retirement Research at Boston College said that over their full working careers, the Early Boomers have actually been treated well by the financial markets, measured against lifetime returns on retirement assets and the experience of the Late Boomers and Generation Xers. Researchers found Early Boomers have enjoyed a 9.2% lifetime return on equities.        

This compares to a 5.5% lifetime return for Late Boomers, and a 0.3% return for Gen Xers. The report noted that Gen Xers may be able to catch up, but Late Boomers are more vulnerable because they have less time to recover before retirement.    

Recently, Mercer reported that as of year-end 2009, nearly 70% of defined contribution participant balances have returned to levels prior to the stock market declines of 2008 and early 2009, but the recovery has not been as strong for older participants as younger ones (see “Mercer: DC Plan Recovery not as Strong for Older Participants”).     

CRR Researchers looked at three hypothetical employees who were age 30 (Gen Xer), 40 (Late Boomer), and 50 (Early Boomer) in 1999, who all began contributing 6% to their 401(k) at age 30, and their employers made a matching contribution of 3%. The employees’ starting salary was based on median earnings for those 30, 40, and 50 with 401(k)s, as reported in the Federal Reserve’s 1998 Survey of Consumer Finances. Nominal salary growth was estimated at 3%.