Bucks are booming, too, for the baby boomers Study predicts ease in retirement


WASHINGTON -- Stop complaining, baby boomers. You're doing just fine.

That was the message from the Congressional Budget Office, which released a report today disputing the apprehension that the boomers -- the 76 million Americans born between 1946 and 1964 -- are less flush financially than their parents were and face a bleaker old age.

Instead, members of the largest generation in the nation's history are -- with the exception of high school dropouts -- "financially better off than their parents' generation was as young adults," the CBO researchers said.

Furthermore, the study predicted that the boomers' economic health will carry them into a retirement as comfortable as the one their parents are experiencing -- if they are willing to settle for that. But if the boomers want to maintain their costly vacations and dining-out habits when their working days are over, they could fall short of cash.

The boomers' financial status is all the more notable, the study continued, because, "unlike their parents, who enjoyed the benefits of a dynamic economy as young adults, baby boomers achieved these gains in income despite the lackluster performance of the U.S. economy in the 1970s and the 1980s."

The study, requested by Rep. Andy Jacobs, D-Ind., chairman of the House Ways and Means Social Security subcommittee, was based on Census data and special surveys of consumer finances.

The generational comparison was most favorable for older boomers, those 35 to 44, who entered the work force while the country was still experiencing dramatic post-World War II growth.

Their median household income was $38,400 in 1989, compared with $25,100 for people of the same age a generation before, in 1959. (The figures were adjusted to express living standards in 1989 dollars.)

But the booming American economy slowed in 1973, hit by the inflationary jolt of the oil embargo, and things have never been quite the same, the CBO said.

For that reason, those 25 to 34, while still enjoying an edge over their parents, are striving in a world where the promotions are less frequent and the pay raises more skimpy. Their median household income was $30,000 in 1989, compared to $22,000 for their parents a generation earlier.

Two striking generational changes have helped the boomers keep pace financially: the movement of women into the work force and an increase in college graduates.

For households of all ages, the highest median income -- $47,000 in 1989 -- goes to families in which the wife is in the paid labor force. When a wife stayed home, the median income was $30,000.

The report acknowledges, however that government statistics do not measure the dollar value "produced by stay-at-home mothers." If it did, the economic edge of the boomers over their parents would be smaller. For the boomers' parents, just a third of married women were working outside the home, compared with about 70 percent a generation later.

Boomers also helped boost their income by crowding onto college campuses. In 1960, just over 10 percent of Americans between the ages of 25 and 29 had gone to college. But in 1990, 25 percent of the same age group had their degrees.

The flip side of the tale of the better-educated boomer, however, is a gloomier life for those who could not keep pace in school. While there were fewer high school dropouts among the boomers -- 13 percent compared with 42 percent in their parents' era -- they suffered more economically.

And what of the future?

The economy keeps expanding, and real wages are growing, although they aren't likely to return to the booming expansion of the 1950s and 1960s, the CBO report suggests.

Boomers can expect "better financial circumstances in retirement" than their parents, the report said.

According to the CBO, the median boomer household in 1989, with a head of household between 35 and 44, could match the wealth of its parents' generation at retirement age by saving $300 a year for 20 years.

The younger boomer household would need to save $1,700 a year for 30 years.

The compounding effect of the long-term savings would generate the money needed to give the boomers the same buying power of their parents who were aged 55 to 64 in 1989.

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