Boomer: Still Sandwiched After All These Years

The Squeeze

• Boomers are a massive, high-achieving generation, but that doesn’t mean retirement is in the bag. 
• Boomers are still in the Sandwich Generation, too, caring for both adult kids and, yes, elderly relatives, which can sap their savings.
• Smart planning is needed to cover rising healthcare costs and shaky Social Security payments.

Boomers — those of us born between 1946 and 1964, the thriving golden period after World War II — are still a huge generation, almost 72 million strong. And to hear the news (or at least younger folk) frame it, Boomers’ ranks are stuffed with hyper-successful/high-earning adults, living so large they’re practically sitting atop bags of gold bullion. 

Granted, Boomers do own more than half the estimated $50 trillion in total U.S. household financial assets, according to Cerulli Associates. But that doesn’t mean they’re on Easy Street. 

Indeed, as with all of us in the Sandwich Generation, the pressures on Boomers abound. Here we examine how well this generation is really doing — and how to navigate the challenges ahead.

Boomers by the numbers

Are you ready for retirement? This generation is retiring in droves, with the pandemic accelerating their exit from the workforce: In the third quarter of 2020, 28.6 million Boomers shifted from the workforce to retirement, up 3.2 million from a year earlier. This uptick in retirement is especially prevalent among the Latinx and Asian-American communities. 

But that doesn’t necessarily mean they are financially prepped to say goodbye to a paycheck: Almost half of Americans don’t expect to live comfortably in retirement, according to a 2018 Gallup poll, versus a mere 32 percent in 2002. Studies (and scary ones at that) have suggested that one in five Boomers have no savings at all, while a third have less than $25,000.

The high cost of care. Forty percent of Americans over the age of 60 who are no longer working full-time rely solely on Social Security for their income, with a median annual benefit of about $17,000. (One frightening footnote: a 2015 report from the Social Security Administration states that the OASDI trust will run out in 2033 if no adjustments are made.) Medical expenses rise every year, with a 65-year-old couple who retired in 2018 staring down an expected expense of $280,000 for healthcare in retirement. What’s more, nearly 70 percent of people retiring today will eventually require some long-term care, according to the Department of Health and Human Services. Still, only 32 percent have a plan for how they’ll receive (and pay for) care in retirement, according to a Bankers Life study. And in the coming decade, nearly half of the oldest boomers are likely to endure some cognitive impairment. According to a report by the Center for Retirement Research at Boston College. Even a mild decline “can rapidly erode financial capacity,” it stated.

Caregiving just keeps going and going. A recent survey of more than 100,000 Boomers found that 24 percent are currently caregivers. Looking at this from another angle, nearly 40 percent of all caregivers in the U.S. are Boomers, typically caring for a parent (hello there, longevity!). Some Boomers are also helping their offspring, with a quarter of Millennials who are employed full-time getting some financial help from their parents.

The challenges ahead

If you’re still with us, we know that these stats can leave you feeling shaken and confused. Join the club. 

“The reality is that most people entering their retirement years don’t have much in savings. Not because they went crazy at the mall but because kids are expensive, people lose their jobs, and our retirement savings plans are flawed,” says Chris Farrell, author of Unretirement: How Baby Boomers are Changing the Way We Think About Work, Community, and the Good Life.

There’s no need to panic. Instead, dip into some perspective and priorities for squeezing the most out of one’s money:

Overcome unexpected hits. The Great Recession, which was over a decade ago, rocked many people’s plans. The COVID crisis had a similar impact. What’s around the corner? Let’s hope all kinds of good stuff, but don’t ignore the need for emergency resources. Recovering from or accommodating emergency scenarios takes foresight (as in, having a financial cushion) and keeping your eye on the markets and the world.  Having a financial advisor can help you do just that.

Redefine your retirement. While media has painted retirement as zero work and endless rounds of golf and Mai Tais, the reality for Boomers may be different — and may not start until age 70. 

Indeed, one-third of employed Boomers, ages 67 to 72, have already postponed retirement, according to the 2019 annual study by the Insured Retirement Institute. And for good reason: It’s important to consider the long-term implications of when you start drawing Social Security, as well as what your expenses will truly be. 

Many assume that their expenses will plummet once they are retired, but an EBRI study shows that one in four retirees exceeds their pre-retirement spending by 20 percent or more in the first few years of retirement. That can blow a budget in a big way, so do a deep dive into your planning.

As for your Social Security benefit itself, “to the extent that it’s practical, delay filing for Social Security to get the maximum benefit at age 70,” says Farrell. “That may mean a different kind of work, perhaps with more purpose; part-time work; or a shift job.”

Strike a Sandwich-Gen balance. With the human lifespan having doubled over the last 100 years, it’s not uncommon to have seniors caring for their parents. What’s more, the fact that the younger generation faces Himalaya-high student debt and diminished economic prospects means that many Boomers are stretched to the max trying to keep the financial plates spinning for three generations. Obviously, something’s got to give, and expert counsel is needed to survive this high-stress scenario.

Underwrite wellness. Healthcare costs are looming as a make-or-break issue for many Boomers. If one has access to an HSA (Health Savings Account), that can offset some expenses, but exploring your insurance coverage options ASAP is critical to building and securing wealth throughout a long, healthy life.

Surviving the later Sandwich Years may not be a snap, but it can be done with some smart planning and prioritization. Firstly^SM is ready to be your partner and your guide.