Retirement Dreamers Face Hard Reality

When it comes to retirement, baby boomers are more likely to be dreamers than planners or savers.

For many, the vision of an extended period of leisure at the end of their life’s work is apt to be more fantasy than reality, according to the soon-to-be released 2006 National Association of Realtors study, “Baby Boomers and Real Estate: Today and Tomorrow.

The Center for Retirement Research (CRR) at Boston College says baby boomers and Generation Xers will retire in a substantially different environment than their parents did. The CCR describes retirees as “living in a golden age of retirement that will fade in the coming decades.”

“Unless Americans change their ways, many will struggle in retirement,” says Alicia H. Munnell, CRR’s director. “There’s no silver bullet: the answer is saving more and working longer.” She says that relatively modest adjustments such as working 2 additional years or saving 3% more a year can substantially improve retirement security, particularly for Gen Xers and younger Boomers.

Underestimating the Challenge

Since the National Retirement Index uses conservative assumptions, such as a retirement age of 65 (the current average is 63 for men and 62 for women) and that households take full advantage of their assets by purchasing an annuity and taking out a reverse mortgage to tap their household equity, the Center says it “may actually be understating the approaching retirement challenge.”