Majority of Baby Boomers will struggle during retirement
Thursday, June 26, 2008
WASHINGTON — Sharp drops in real estate values will leave the "vast majority" of Baby Boomers nearing retirement with "little or no wealth," the Center for Economic and Policy Research reports.
If housing prices stay the same through next year, the median household headed by 45-to-54-year-olds will have 24.7 percent less wealth in 2009 than the same age group had in 2004. If real estate values keep declining, as expected, a 10 percent drop would bring a 34.6 percent loss of wealth, and a 20 percent drop would reduce wealth by 45.6 percent.
"This extraordinary destruction of wealth will have tremendous implications for millions of families as they enter retirement," co-author Dean Baker said. "Coupled with a very low personal savings rate, this means that many people will only have Social Security and Medicare to rely on in their retirement."
CEPR based the analysis on data from the Federal Reserve Board's 2004 Survey of Consumer Finance, and used the S&P 500 and the Case-Shiller 20-city Composite Index to adjust for changes in home prices and equity between 2004 and 2009.
See www.cepr.net for the report, "The Housing Crash and the Retirement Prospects of Late Baby Boomers."
— Kevin Lamb, Staff Writer
