Baby Boomers

But despite the tendency for the entire culture to take on the boomers' current persona as it evolves through the life cycle, the boomers are in reality an extremely diverse group. Income inequality is high among the baby boomers: one study suggests that inequality among the boomers is nearly 15 percent greater than it was among their parents at the same age (Easterlin et al.). In the mid-1990s median income in white boomer families was nearly twice that of black boomer families, while the poverty rate among black and Hispanic boomers was more than double that of whites (Levy). "Leading edge" boomers (those born during the first half of the boom) have fared better economically than their younger counterparts. Boomers who served in Vietnam have never been able to close the wage gap with their more fortunate counterparts who stayed at home (Angrist). Half of full-time private wage and salary workers among the baby boomers were not covered by private pensions and nearly half of baby boomers did not own homes as they progressed through middle age (Kingston).

Approximately eighteen million baby boomers are members of racial minorities. As a result, the Census Bureau projects that while 87 percent of the elderly population in 1990 were white non-Hispanic, this proportion will drop to 76 percent in 2030 and to 70 percent in 2050. Some suggest that because members of minority groups work disproportionately in "physically arduous and partially disabling working conditions," they may be disproportionately affected by increases in the early retirement age (Kingston; Lee and Skinner).

Over one-tenth of baby boomers are high school dropouts, including 4 percent with less than a ninth-grade education. Baby boomers' median household income at the start of the 1990s, after adjusting for inflation, was less than that of a similar household in their parents' generation. Similarly, the proportion of baby boomers heading single-parent households has tripled relative to their parents at the same age. Ninety percent of those households were reported to have less wealth than income, and income levels only one-third the size of that for married couples with children (Kingston).

Those thought to be at the greatest risk with regard to retirement prospects are singles— especially single mothers, and more than one-tenth of female baby boomers head their own households— and those with lower levels of education, those with nonstable employment patterns, non-homeowners, and the youngest of the baby boomers.

In general, analysts tend to agree that boomers will on average exceed their parents' standard of living in retirement—and will do so by a substantial margin—although some suggest that replacement rates (the ratio of retirement to pre-retirement income) may fall (Easterlin; Congressional Budget Office; Employment Benefit and Research Institute; House Ways and Means Committee). They have, on average, exceeded their parents' standard of living at all points in the life cycle to date by 50 to 60 percent and more on a per capita basis. However, there is some disagreement on this topic, based on analyses that focus solely on male earnings and family or household income, rather than on per capita income (Levy and Michel).

In addition, some have emphasized the effects of the demographic adjustments made by the boomers to raise per capita incomes (delayed/ foregone marriage, reduced fertility, and increased divorce). It is suggested that the boomers in retirement are less likely than their parents to be living with a spouse, and are likely to have fewer adult children. As a result, although economic well-being may be relatively high for the average baby boomer in retirement, total wellbeing may suffer (Easterlin et al.).

Analysts disagree about the adequacy of boomers' savings for retirement. Some project that 50 percent more retired boomers than nonboomers will receive income from private pensions, with nearly three-quarters of boomers receiving some pension money and the average boomer receiving nearly two-fifths of retirement income from pensions—some 60 percent more than is received by non-boomers (Andrews and Chollet). However, many have voiced concern about the boomers' savings; and in this case the younger boomers seem to be doing better than the older boomers. The median ratio of wealth to income for younger boomers has risen about two-thirds relative to that of their parents, but for older boomers the ratio has remained relatively constant. And while their parents' savings benefitted from windfall gains later in life, it has been suggested that the boomer ratio of wealth to income will fall as retirees age, because of lack of protection against inflation in private pension plans. In addition, some feel that many baby boomers' plans are subject to high levels of risk, and that many baby boomers are underestimating their longevity in saving for their retirement (House Ways and Means Committee).

It has been projected, based on the current system, that Social Security will provide 60 to 70 percent of retirement income for boomers in the bottom half of the income distribution in 2019. For most baby boomers, retirement incomes will be well above those of today's retirees (50 to 60 percent higher), and will be more than adequate, but the projections indicate that the proportion of elderly baby boomers who will be poor or near-poor may reach almost 20 percent, with the majority of these being singles, and especially single women (House Ways and Means Committee).

However, some have questioned the reliability of the more optimistic forecasts, due to what they see as significant effects of the baby boom on the economy itself—in areas such as the housing market and stock market, interest rates, savings, and inflation rates (Fair and Dominguez). Based on these historic effects some suggest a potential "asset meltdown" when retiring baby boomers cash in their holdings, a view that remains highly controversial.