The only question was what audacious things boomers would accomplish with their retirement windfalls. "Unlike previous generations, boomers have the freedom and the resources to contemplate not just survival, but fulfillment," Steve Gillon, author of Boomer Nation, told Money magazine in 2007. All that money would allow boomers to pursue more meaningful or joyful work, a concept popularized as "encore careers." Goodbye grind, hello volunteering and starting your own business. Financial-services ads showcased a retirement fantasia of adventure travel and yachts.
The reality, as indicated by a slew of ever-more-sobering studies, is a little more complex. Fidelity claims that someone 55 or older who has been active in his or her 401(k) for the past 10 years is likely to have $269,500 saved, which sounds grand until you hear that $220,000 will just cover medical expenses for a 65-year-old couple in retirement. And most Americans don't have nearly that much anyway: According to the Center for Retirement Research at Boston College, the typical account for a worker nearing retirement is only $42,000. (Oh, and 55 percent of current workers don't have any employment-based savings at all.) AARP says that three-quarters of Americans between 55 and 64 have less than $30,000 socked away. It all adds up to a $6.6 trillion gap between what we have and what we need.
So what will we do now?
Well, you change what people expect of life when the word "retirement" comes up. And it turns out, we're already doing it. We just didn't know it.
Retirement itself is a very modern concept, an artifact of postwar prosperity and longer life spans. For most of history, those lucky few who managed to reach an advanced age kept working until they were physically unable; rural life and extended families provided the safety net. But the industrial revolution and the longevity revolution put an end to that. Enter Social Security, which offered older Americans both a bulwark against poverty and an encouragement to leave the workforce.
If you ask Marc Freedman, the founder of Encore.org, those postwar retirement communities in the Leisure World mode were less about leisure and more about warehousing people who no longer had an economic role in society. "We made a virtue out of necessity," he says. As for our current situation? "We need to come up with a different solution."
And we have that solution. In one of the great ironies of history, the "Me Generation" will transform into the "We Generation" in their later years. "Boomers will not so much be doing their own thing," says Age Wave's Dychtwald. "They'll be helping out the grandchildren and maybe having a sister move in."
Many theorists predict that employers will eventually adapt and absorb this army of boomers who either desire or need to remain on the job at ages when their parents were working on their golf strokes. But there are other needs, too. "Whatever economic challenges the over-65s are facing these days, they pale by comparison with the money troubles of the young," writes Paul Taylor of the Pew Research Center in the new book The Next America: Boomers, Millennials, and the Looming Generational Showdown. Staggered by a slow economic recovery and their hefty college debts, today's younger people are going to need all the help they can get.
Often, they are finding that assistance from boomers: A 2013 Merrill Lynch–Age Wave survey found that 62 percent of those 50 or older had helped out family members financially in the past five years. Other boomers are pitching in with unpaid labor: Currently 30 percent of preschoolers are taken care of by grandparents when Mom or Dad is at work or school.
Next page: Boomers needed more than ever. »