older middle age woman at computer looking stressed

Changes in the retirement system—from a later Social Security retirement age to a switch from defined benefit plans to 401(k) plans and IRAs—were expected to result in relatively less wealth from DB plans and Social Security and much more from 401(k)s and IRAs. But according to a brief from the Center for Retirement Research at Boston College, that has not been the case.

Instead, younger members of the boomer generation (ages 51–56), who might be expected to have accumulated more retirement wealth in 401(k)s/IRAs than older boomers after more of their careers were spent working for employers who offered defined contribution plans instead, are showing a "surprising drop" in IRA assets when compared with earlier groups at the same ages.

The brief points out that late boomers really got nailed in the Great Recession, with many still out of work even during the later recovery. But even those who managed to continue to work are coming up with the short end of the stick, hit by the triple whammy of lower earnings, less 401(k) participation, and flat 401(k) balances."

So not only are late boomers suffering from "predicted declines in defined benefit plans and Social Security," says the report, but also an unanticipated drop in 401(k)/IRA assets—something researchers find alarming since that group of boomers would have spent most of their working lives accustomed to a DC, rather than a DB, plan.

Examining working households, researchers found that after the Great Recession, that triple whammy meant that their retirement assets don't come near approaching those of earlier cohorts.

And in reviewing the retirement assets of younger groups—GenX, GenY and GenZ, and early millennials—researchers found that some of them, too, could be in financial jeopardy. Late boomers' low 401(k)/IRA wealth, they found, can be explained by particularly high levels of unemployment during the Great Recession and more reliance on lower-paid jobs when they managed to find work again. But the trend does not appear to be ending with that single age group.

According to the report, the same information on those four later age groups "suggest these later cohorts may not see any improvement. Their balances tend to fluctuate around those for the Late Boomers, which would not be a good result."

As to why this particular age group was so hard hit, why they were unable to recover, and why the effect should carry over into the fate of future groups, the report concludes that these questions are still waiting to be resolved.

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Late boomers coming up short on retirement assets

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