In 1946, less than a year after World War II ended, Americans began to notice something unexpected: The economy was not sinking back into the Great Depression. Rather, to everyone’s surprise, it was growing strongly. And then people noticed something else: lots of babies. Married couples who had put off having kids in the 1930s and during the war were now eager to start a family. Birth rates surged. The nation was ready to grow. “The Great American Boom is on,” announced Fortune magazine that summer.
By the early 1950s, everyone was talking about this “baby boom.” When would it end? Not soon, it turned out. Increasing productivity and rising wages for young workers -- along with new social infrastructure such as suburbs and the interstate system -- kept families growing for another decade and a half. By the mid-1960s, the live-for-today counterculture finally extinguished the urge to marry early and have lots of kids, and the birth rate fell. But by then, America had already experienced a seismic demographic shift unlike anything in its history. Baby boomers, defined by the Census Bureau as everyone born from 1946 to 1964, had arrived.
The oldest boomers began entering America’s college campuses in the mid-1960s, helping to ignite countercultural passions and push the nation into an era of political idealism, cultural awakening and social upheaval. In the years that followed -- from LBJ to Reagan, from hippie to yuppie -- boomers shook the windows and rattled the walls (to paraphrase Bob Dylan) of everything their parents had built. In so doing, this generation began to manifest so many of the collective attitudes and behaviors for which they have since become famous: their individualism, their attraction to personal risk, their distrust of big institutions, their carelessness about material wealth, their cultivation of self, their die-hard moralism.
Now the baby boomers are starting to get old. The first boomer born in 1946 turned 65 last year; the last will reach age 65 in 2029. By then, the total population of Americans over 65 will swell from 41 million to 70 million, a 75 percent increase. In many states, the increase will be even more extreme. For most of the next two decades, the senior population will be growing at well over 3 percent per year. That’s far faster than total U.S. population growth, and faster than real gross domestic product (GDP) growth (in recent years, anyway). In 2010, seniors accounted for 13 percent of the population; in 2029, they’ll account for 19 percent. One in five people you see walking down the street will be over 65.
And the elderly themselves will be getting older. Thanks to the tremendous advances in medicine over the past half century, the boomer wave isn’t just about the post-65 crowd. Between 2020 and 2039, boomers will expand the 75-and-over population by 93 percent. Between 2030 and 2049, the number of Americans 85 and over will climb by 113 percent. Come midcentury, people over 65 will outnumber those age 15 and younger.
The consequences of this quantitative population shift are dramatic and sweeping. First and foremost, of course, health-care consumption will skyrocket, along with massive spending increases in federal entitlement programs like Social Security and Medicare. As retirement-age boomers begin to move out of the workforce, there will be a depressing effect on employment, production, revenues and GDP. Consumption rates will increase, while savings rates will fall. Public capital investments in areas such as training, education and work-related infrastructure will likely decline.
But the real story of America’s aging population goes far beyond the numbers. There are huge forthcoming shifts in the attitudes and behaviors of seniors. The generation that’s about to retire will have vastly different wants, needs, likes and dislikes from previous waves of retirees. To understand the real impact that this demographic change will have -- to prepare for this unprecedented shift in population -- one must examine what it is that makes this particular generational cohort unique from all others. It’s time to get to know the boomers.
There’s a persistent myth that baby boomers have a lot of wealth. They don’t. Even before the Great Recession, boomers weren’t very well positioned for retirement. In 2007, just before the housing bubble burst, older households (between 55 and 64) had a median net worth of $266,000, according to data from the Federal Reserve. As David Callahan, an author on wealth and a senior fellow at the liberal Demos policy organization, wrote in June, “That figure included everything -- home equity, savings, 401(k)s, etc. -- and is hardly the kind of money people need to get through their golden years. By 2010, though, the nest eggs of Americans approaching retirement had shrunk dramatically, falling to $179,400 -- a 33 percent drop.”
Thanks to a host of factors -- including a declining focus on socking money away, the high costs of funding their kids’ college educations and paying for their own aging parents’ care -- a large portion of boomers have found their savings wiped out. A Harris Interactive poll last year found 25 percent of boomers don’t have any money saved for retirement, and 26 percent have no personal savings at all.
Today’s elderly, especially “Silent Generation” retirees currently in their 70s, are fairly well off. Indeed, relative to younger households, present-day retirees are more financially comfortable than at any time in history. This is a generation that, for the most part, played by the rules and saved scrupulously. They were able to retire on generous defined-benefit pension plans and got to cash out their home and retirement assets before the 2008 crash. Federal data released earlier this year show that, for the first time ever, households headed by people age 75 and over have a higher median net worth than any younger age bracket.
Yet this elder affluence is destined to fade fast as successive waves of boomers turn 65. There will be a pronounced, predictable shift in retirees’ overall socioeconomic situation, including a decline in educational attainment and the share with college degrees, a decline in the professional share, a decline in household net worth and pension assets, and a relative decline in pre-retirement income. As a result, these new elders will be in gradually greater risk of ending up in poverty or on the brink of it. That means a rising challenge for public officials concerned for “young elders” without income, food, personal care or health insurance.
At the same time that the living standards for the median elder will be on the decline, the inequality of living standards will be on the rise. As economists Mary Elizabeth Hughes and Angela M. O’Rand explain in The Lives and Times of the Baby Boomers, this generation (especially the late-wavers) was hit hard in the 1960s and ’70s by rising divorce rates, surging immigration and a widening gap between college and non-college wages. The combined effect was to increase the distance between the haves and have-nots. Other authors, such as Myron Magnet or Charles Murray (in his recent book, Coming Apart), stress a different reason for the rising “spread” in boomer outcomes: the greater lifestyle freedoms young boomers enjoyed, including the freedom to not go to school, get a job, get married or plan for the future. They argue this freedom has adversely impacted America’s working class more than its elite.
Whatever its causes, this rising inequality will reshape the material look and feel of the new elder lifestyle. High-end vacations and luxe retirement goods may still find a niche market. But staunchly middle-class retirement options likely will disappear. Boomers invented “the hourglass economy,” according to business writer Michael Silverstein, which is characterized by “death in the middle” for the merely average, as opposed to the premium or discount. Even if they can afford it, most boomers are repelled by the idea of a middle-class brand. In the homes of tomorrow’s Old Aquarians, you’ll find more things from Restoration Hardware or the Dollar Store, and fewer items from anywhere in between.
Ethnic and racial diversity will also be on the rise. If today’s Silent Generation of elders seems culturally homogeneous, there’s good reason: Due to their spot in history as children of the Great Depression and young adults of the 1950s, the Silent Generation has turned out to be the least-immigrant generation per capita in American history. Boomers will not follow suit. The Hart-Celler Act of 1965 greatly widened the legal window for newcomers, and many other boomers climbed through windows that weren’t exactly in the law -- making boomers a generation of rising immigration from first to last cohort. Between now and 2030, the Hispanic share of Americans ages 65 to 84 will jump from 7 to 12 percent; the Asian share, from 3 to 6 percent; and the African-American share, from 9 to 11 percent.
Boomers aren’t as diverse as the younger generations -- Generation Xers and millennials -- that follow them. But in languages, cuisines, religions and customs, boomers will be a markedly more diverse generation of retirees than the last.
What does all this mean for retiring boomers? How will they differ from the generations that preceded them?
For starters, boomers will redefine the whole idea of retirement. As the “G.I. Generation” (born between 1901 and 1924) began to retire in the mid-1960s, they pulled the retirement age down dramatically. Back in 1960, one-third of all males over age 65 were employed. By the mid-1980s, thanks to Social Security, Medicare and the spread of private retirement plans, only 15 percent were employed. The retirement age has essentially remained unchanged since then, but boomers are starting to push it up again. The median age of retirement on Social Security, after lingering around 63 for many years, recently ticked up to 64. And the number of Americans in their late 60s who are still working has skyrocketed. In fact, the Great Recession has hardly touched the employment of seniors. Since 2007, the number of jobs held by Americans over 60 has risen by 3 million -- while declining by more than 5 million for everyone 60 or younger.
It’s not hard to explain why more seniors are working, and why the number will accelerate even faster as more boomers rush past 65: economic necessity. According to AARP, “current financial need” is by far the single biggest reason older workers cite for working past the normal retirement age. What’s more, this is no surprise to most boomers, who have known for a long time that they would have to retire later. Between 1996 and 2006, according to the Employee Benefit Research Institute, the share of workers ages 45 to 54 who expected to retire at some point beyond age 65 rose from 13 to 31 percent. Since the financial meltdown, the numbers have simply tilted further. In 2012, 43 percent expect to retire after 65.
But money isn’t the whole story. Even among aging Americans who can afford to retire, many will choose to keep working. For a lot of successful boomers, retirement sounds like death. They’ll choose to stay engaged in productive activity even if they don’t need the money. One out of five boomers, according to AARP, insist that they work mainly for “psychological or social fulfillment.” Millions of boomers are following the model of Bill Clinton or Bill Gates and starting a post-retirement “encore career,” using their skills in the service of some higher cause -- education, health, the environment, social welfare -- for little or no pay. New York Times columnist Nicholas Kristof calls this a “give-back revolution” and hopes that if enough boomers find a meaningful calling late in life, “they may just be remembered more for what they did in their 60s than for what they did in the Sixties.”
The bottom line is that over-65 households in the next few decades are much more likely to be working households than their counterparts 10 or 20 years ago. That will be helped along by the increasing popularity of free-agent and part-time working arrangements, as well as broadband and other technological improvements that make it easier and more acceptable for the multitude of boomer “cultural creatives” to work from home.
Boomers whose jobs don’t allow them to work remotely or part-time -- and those with disabilities that prevent them from continuing to work -- will be at a disadvantage. Unfortunately, many of those people are already low-income earners. In recent years, boomers (mostly those without college degrees) have been “retiring” on disability insurance (DI) before age 65 at a 50 percent higher rate than the Silent Generation did back around 1990. Few DI recipients ever work again or regain any sort of income security. The disability boom among boomers (DI cash benefits have grown nearly as fast as Medicare over the last decade), accompanied by surging employment by nondisabled boomers approaching age 65, further reinforces the widely divergent outcomes within this new generation of elders.
All told, retirement for boomers won’t look anything like what it’s been for the past several decades. For most, retirement will be delayed and gainful employment will become the new normal. And if the weak job market lingers for younger Americans, fat senior wages could trigger broader policy changes. Gen Xers and millennials may complain that boomers’ refusal to retire is making it impossible for them to advance in their careers. It was just that kind of argument that helped secure passage of the original Social Security Act of 1935 -- intended to clear out the deadwood and, in the words of New York Sen. Robert Wagner, the original sponsor of the bill, to “make new places for the strong and eager.”
Thirty or 40 years ago, there were stark, clear differences in generational likes and dislikes. Youthful boomers invented the generation gap and the notion that you shouldn’t trust anyone over 30. Boomers actively, purposefully chose to have nothing in common with their parents. Not so today. Pop culture now is much more universal. Boomers and their kids swap book recommendations and trade emails about last night’s “American Idol.” They post Facebook updates about the same celebrity breakups, and they see the same movies. Their iPod playlists overlap. The generation gap has been erased.
Beyond pop culture, a growing closeness between boomers and their young adult children reflects a major shift in family dynamics. One example: Millennials are much more comfortable gravitating back home. In 1980, 11 percent of 24- to 34-year-olds lived with their parents. In 2010, 22 percent did. Part of that certainly has to do with the weak job market, but it’s also indicative of the complete closure of the values gap. Boomers and their children maintain much closer financial relationships than boomers did with their own parents. Boomers are still helping their kids find jobs, cosign mortgages or car loans, pay for family vacations, and care for grandchildren. Grown kids, meanwhile, are helping their boomer parents with chores, shopping and other errands.
Those stronger family connections will continue to play out as boomers get older. When the G.I. Generation retired, many of them packed up their bags, sold their homes and moved to retirement communities in sunny climes far away from their adult children. Most boomers won’t want that -- partly because of the desire to be near their kids, and partly because, again, many boomers will continue working well past retirement age. The new elders are much more likely to choose to age in place, in the house where they already live, than to decamp to an existing retirement village. The boomer buzzword for this phenomenon will be NORC, or “naturally occurring retirement community.”
Four out of five boomers tell AARP they want to remain in their own homes even when they need assistance. The next decade promises to be the golden age of the home remodeler, as boomers with funds turn that circa-2000 pleasure-palace McMansion into a rambling circa-2020 extended-family home reminiscent of the rambling Depression-era residences in all those old Frank Capra movies.
To the extent that boomers do move, they’ll be much less interested in exclusive elder communities. Many will prefer mixed-use urban quarters where they can be around young people. And of course many will be attracted to locales -- university towns, art centers -- where they can reaffirm their connection to the world of the mind and culture. Even when they do opt to move to active adult communities, they’ll choose to stay closer to home. Already, retirement-home developers have begun building fewer massive seniors-only projects in Arizona and Florida, and more smaller developments around various cities in the Northeast and Midwest. Wherever it’s located, though, the elder community of the next couple decades is likely to have fewer rules and more opt-out provisions. Forget those restrictions against kids living in the communities. (For now, such edicts remain a great favorite among local authorities who want the revenue that comes with retirees, but not the extra costs that come with kids. That will change.)
With boomers, as always, one must keep in mind the widening spread in outcomes -- not just between rich and poor, but between familied and unfamilied. Coming of age amid feminism and watershed changes in gender roles, lots of boomer women have chosen not to have kids. To be specific, the share of women who are childless at or near the end of their childbearing years has risen from 10 percent for those born around 1940 to 20 percent for those born around 1965. So even with all the reconnecting within extended families, a growing number of boomer elders will have new ways of defining family. They will be adoptive parents, connecting into blended families through remarriage or doting on their nieces and nephews. Many will gather in intentional communities, cooperatives or just close groups of friends and neighbors and consider these their “family.” Today, we habitually think of elders as defined by their lifetime marriages and nuclear families. Twenty years from now, we no longer will.
Compared to their parents’ generation, boomers have always lived on the edge. In their youth, they launched a behavioral trend toward personal risk-taking: higher rates of drug use, teen pregnancy, suicide and self-inflicted accidents, along with lower test scores, later marriages and later career choices. They’ve taken that “born to be wild” streak -- “If I have to break the rules to do it my way, I will” -- and stuck with it. Americans in their 50s and early 60s have recently been experiencing sharply rising rates of drug overdoses, sexually transmitted diseases, motorcycle fatalities, and suicides. This will continue as they move past age 65.
Especially worrisome are personal-risk habits that have adversely affected their health. As boomers have reached midlife, for example, rates of chronic disease for people in their 50s and 60s have risen sharply, especially diseases driven by obesity, like type 2 diabetes. Disabilities that limit activities of daily living (ADLs) are also more common. For the last 30 or 40 years, as the G.I. and Silent generations retired, ADL disabilities among those 65 and older have been on the decline. Some health experts and demographers believe that as boomers move past 65, that trend may reverse. “Even in older age, people have an amazing ability to change behavior and for that to change health risk,” Teresa Seeman, professor of epidemiology at the University of California in Los Angeles, told the Los Angeles Times a few years ago. “If we don’t do anything, we’re going to face an older population that is bigger and much more disabled.”
The implications for health-care spending are alarming. Even before the boomer age wave hit, U.S. health spending was already growing faster than GDP. The sheer size of the boomer demographic is certain to accelerate the pace of health spending. The elderly spend three times more than the average per capita on acute care, and 10 times more on long-term care. Adding the extra kicker of accumulated lifestyle behavior will push costs up even more. In other words, higher risks have higher costs.
Yet boomer attitudes toward health care may come with a bright side. This is a generation that came of age with a new “natural” and “holistic” attitude toward diet, exercise and healthy living. While that hasn’t proven very effective in improving lifestyle habits, it has certainly changed boomers’ approach to health-care treatment. More than their parents or grandparents, boomers look energetically for alternatives to high-tech industrial medicine and want to be fully informed and personally involved in their own healing. Most physicians believe these attitudes tend to improve compliance and keep costs down. Hospitals are now starting to offer natural foods, allowing complementary and alternative medicines, building rock gardens, and hiring spiritual and lifestyle counselors. Many of these New Age tools may help. They can’t hurt. And they’re much cheaper than installing another million-dollar MRI scanner.
Boomers’ aversion to long-term institutional care -- combined with the greater willingness of family to pitch in and the reluctance of government to spend -- has already led to a dramatic reduction in the new nursing home units that state and local governments are expected to build. (Several states have flatly declared they will build no new units.) Boomers will be much more interested in home-health options or more flexible modes of assisted living. When boomers do enter long-term care, a growing share will insist on small, informal, decentralized units that have live-in staff and allow plenty of plants and pets. One prototype for this new approach is the Green House Project, whose motto (“Caring homes for meaningful lives”) is pitch-perfect for boomers.
Overall, boomers are struggling with the challenge of staying healthy, and many are losing in that struggle. Yet they’re also much more open to the argument that health is partly a state of mind. For states and cities, this outlook could allow health dollars to be more effectively targeted. It certainly opens the way to positive reforms in the way the health-care industry is organized and how it provides services.
There’s long been a notion that elders are active, engaged citizens and one of the biggest, most organized political blocs. That was largely true for G.I. and Silent generation retirees. But don’t expect it to continue. Boomers in old age will be less “gray panthers” and more “bowling alone.” The generation that invented McMansions and the exurbs has never been big on group cooperation, and that isn’t going to change now. With every age bracket they’ve entered so far, boomers have marked a decline in civic participation, including voting, municipal meetings, petition campaigns, letter-writing and responding to pollsters. That attitude will start to transform the reputation of seniors as highly engaged civic participators to something far less -- or at least different. The media keeps reiterating the idea that boomers will add their vast numbers to the powerful senior associations that exist today. But the me-first boomers don’t join associations.
Boomers will engage on issues, but they’ll tend to be single-cause issues. Unlike their parents, boomers have never organized successfully around their own self interest. In other words, boomers won’t respond at all until you push their buttons and elicit passionate and perhaps “uncivic” engagement. Distrust and cynicism will rise. Today’s retirees tend to be civil and respect expertise even when they may disagree with it. Tomorrow’s boomers will find it much easier to be uncivil, to regard passion as a sign of commitment and to disrespect expertise freely. Prepare for a plethora of angry bloggers and retired professionals who know how to file an obstructive lawsuit in a heartbeat.
For state and local governments, that could represent a shift in how they communicate and interact with the population at large. Currently, government communications often start with older generations -- including seniors -- as the best way to get everyone on board: Elected officials phone civic leaders, visit corporate boards and place editorials in newspapers. By engaging older people and getting their attention and compliance, the assumption is that tuned-out young people will simply go along. As time passes, governments may want to rethink that strategy. A better way may be to try harder to connect with a more trusting, networked and plugged-in generation of young adults while actually doing less with an increasingly unplugged generation of elders. This means communicating more through K-12 schools, colleges, youth groups and on Facebook -- and leveraging the power of young parents and volunteers to spread the message and sway opinion through their own networks.
Boomers can still be helpful, but in a new way. The boomers’ parents -- those whom we still call “senior citizens” -- were (and in their 80s and 90s, still are) happy to serve as ground troops, licking 100 envelopes, phoning 10 friends, and following any directions they are given. With boomers, though, that won’t be any more effective after age 65 than it was before. What works much better is to bring in boomers early in the process, listen to their insights, help them “discover” for themselves the need for a new government initiative and then let them communicate that “vision thing” to the community in any way they want. Again, boomers have always been better talkers than doers. Don’t even try to give them orders. Instead, inspire them to become passionate advocates of your cause.
Even while boomers fall in civic engagement and dissociate themselves ever further from the “senior citizen” self-image, they will continue to rise in terms of social cachet and cultural creativity. They’ll continue to drive popular culture: Expect to keep seeing the likes of Mick Jagger, Tom Petty, Madonna and Brian Wilson celebrated during Super Bowl halftimes even as they age into their 70s. For boomers, the most sought-after local communities will be renowned for their culture, their soul, their unique story, their authenticity -- not, as it might have been for G.I. Generation retirees, for their wide roads, gleaming tiles and endless golf courses. Many boomers will be congregating around universities and colleges, art and music hubs, and natural and historic landmarks. In so doing, the boomers will have entirely reversed the reputation of their G.I. Generation predecessors in old age as civically powerful and culturally weak; elder boomers will be civically weak and culturally powerful.
The takeaways for policy leaders are clear. Even as officials push communication about rules, regulations, cooperation, and compliance toward the young, they will want to invite the old to frame the rhetoric and announce the vision around which the community is being asked to come together. In the 2020s, young people will listen to the old on values -- in a way they never dreamed of doing back in the 1970s.