High expectations dont match reality
by Financial Armageddon June 5, 2008
A new study finds that the baby-boomer generation — the 79 million Americans born between 1945 and 1964 — has broken that rule with a vengeance and are ill prepared for retirement as a result.
The study, by the McKinsey Global Institute, the think-tank arm of the consultants McKinsey & Co., carefully examined the saving behavior of various generations. The “silent” generation, the 52 million Americans born from 1925 to 1944, followed the classic pattern closely, with their household savings rate rising from below 15% in their early 20s to about 30% in their late 40s. But that pattern is almost absent for early boomers, those born 1945 to 1954; their saving rate tops out about 20%; and it’s completely absent for late boomers, those born 1955 to 1964, whose saving rate so far has remained stuck at around 10%.
“Our analysis shows that the Boomers’ missing savings peak accounts for most of the collapse in the U.S. household saving rate from its peak of over 10 percent in themid-1980s to around 2 percent today,” write the report’s authors, Diana Farrell, Eric Beinhocker, Ezra Greenberg, Suruchi Shukla, Jonathan Ablett, and Geoffrey Greene...
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