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Senior Resources » Elder Law » The Coming Retirement Squeeze: Why the Mid-2020s Will Be a Tough Time for Many Retirees

The Coming Retirement Squeeze: Why the Mid-2020s Will Be a Tough Time for Many Retirees

Excerpt from Chapter 1 of Retirement Watch by Bob Carlson, (p. 16-18)

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The Boomer Peak and Its Consequences

The population is aging, and that’s a problem.

The Baby Boomers have triggered massive changes in institutions and the economy as well as significant disruptions in society throughout their lives. Now, most of that generation—those born from 1946 to 1964—is in or nearing the retirement years. The first Boomers reached age sixty-five in 2011. Since then, about ten thousand Boomers per day have turned sixty-five. But that is only the beginning. The middle section of the Boomer generation, which is larger than the early section, will begin turning sixty-five in 2024. At that point an estimated twelve thousand people will be turning sixty-five every day. That’s the Boomer Peak. All Boomers, an estimated 73 million people, will have reached age sixty-five by 2030. One-fifth of the U.S. population will be sixty-five or older in 2030. There will be more sixty-five-year-olds than children in that year.

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The pressure on every aspect of retirement will increase as the Boomer Peak approaches, and it will continue as long as a significant portion of the boomers are with us. Additional demands will be put on institutions, programs, and sectors of the economy affected by whatever age group the Boomers are in at the moment, just as they were when the Boomers were young. The Boomers crowded schools and universities during their early years, as they went through their life cycle, they increased the demand for housing, baby products, and more. Now, they’re putting stress on goods and services demanded by those aged sixty-five and over.

The primary stress is on Social Security and Medicare, as we saw above. But the Boomers are also straining medical care. There are shortages of doctors, nurses, and other medical providers as well as of medical supplies. These shortages will only become worse, making it harder to schedule appointments for medical care and also increasing the cost. 

In short, many of the goods and services you need and desire during retirement are likely to be in short supply and increase in price because of the aging Boomers.

As we have seen, an aging population also means decreased productivity and economic growth. This is a global problem. While the U.S. population is aging, its population is much younger than the populations of the developed nations of Europe and Japan. China also has a very old population, a result of the one-child birth policy it adopted several decades ago and relaxed only recently. The aging global population, especially in the major economies of the world, is another reason to expect economic growth to be lower than it has been the last few decades.

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What You Should Do: Rev Up Your Retirement Plan

Most of the trends following 1982 favored retirees. But those trends are peaking and reversing and are likely to be against you if you will be retired during the mid-2020s, especially if you begin your retirement during that period. They’re being succeeded by new trends that will make it more difficult to maintain financial security and independence during retirement.

But my message is not one of despair and giving up. My message is that you can have financial security and independence in retirement, but you can’t rely on the strategies and systems that worked for previous generations of retirees. Those retirees benefited from low inflation, low interest rates, high investment returns, and a bull market. All of these trends are likely to alter significantly.

Instead, this is a time to rev up your retirement planning. The big trends will no longer cover up retirement mistakes and oversights. When most people think of retirement planning, they think first of the investment markets and how to increase returns. I’m saying you should pay more attention to the other elements of your retirement finances. You can’t do much about the investment markets; you certainly can’t control or predict them. But there are other aspects of your retirement finances that you can control…The actions you take now and in the next few years will determine how vulnerable you are and how likely you are to be buffeted by these challenging new trends.

Read more by ordering your copy of Retirement Watch by Bob Carlson!


Retirement Watch

The Essential Guide to Retiring in the 2020s

Order Retirement Watch: The Essential Guide to Retiring in the 2020s

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America’s #1 retirement adviser offers tried and true investment strategies for before and after retirement. Sound guidance from the creator of RetirementWatch.com and the author of Where’s My Money?: Secrets to Getting the Most Out of Your Social Security.

The 2020s are likely to be among the worst times to be nearing retirement or in the early years of retirement. The book first explains the forces that are coming together to make it more difficult to create and maintain financial security and independence in retirement.
The middle of the Baby Boomer generation will increase the pressure on every aspect of retirement. The early boomers began reaching 65 in 2011. Since then about 10,000 Boomers per day have been hitting 65. But the middle section of the Boomers is larger than the early Boomers. Beginning in 2024, an estimated 12,000 Baby Boomers will turn 65 each day.

Already the foundations of retirement, Social Security and Medicare, are under stress. The rapid increase in the number of Boomers enrolling in these systems will increase the strain. 

In addition, the high returns in stocks and other investments since 2009 (and especially since 2017) make it likely that investment returns will be below their long-term averages during most of the 2020s. Further, interest rates on traditional retirement income investments, such as certificates of deposit, short-term government bonds, and money market funds, are the lowest they’ve been in U.S. history and are likely to remain below their historic averages.

In addition, taxes imposed by all levels of government are likely to increase during the 2020s. A longstanding myth is that a person’s tax burden will decline in retirement. That hasn’t been true for some time, and in the 2020s retirees are likely to face a range of tax increases.

For a long time, many retirees left a lot of money on the table by making less-than-optimum decisions about Social Security, Medicare, IRAs, 401(k) rollovers, long-term care, and other key retirement issues. For example, a recent study done for United Income concluded that only four percent of Social Security beneficiaries made the optimum decision about when to claim retirement benefits.

For the most part, the Boomers mistakes were bailed out by high stock market returns and low inflation. Retirees in the 2020s aren’t likely to be so fortunate. 
Peak Boomers have to make the right decisions about all aspects of their retirement finances. This book will cover each of the key retirement planning issues faced in the five years before retirement and the first five years of retirement and guide readers to making the right decisions for them. Order TODAY!


Click here to learn about estate planning.

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Originally published October 09, 2023

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