There is no substitute for disciplined saving and a globally diversified investment portfolio. Many of us baby boomers believed we would live forever. It’s now payback time.

But what about the economic and cultural forces that have left baby boomers, myself included, financially unprepared for retirement?  Delay for us isn’t a choice but a financial imperative.The median balance for a household headed by a baby boomer age 60 to 62 with a 401(k) plan was just $149,400 – not even twice their median annual income of $87,700, according to Boston College’s Center for Retirement Research, which sponsors this blog.  Using the “4 percent rule,” a 401(k) would generate roughly $7,000 a year in retirement, the amount that retirees can safely withdraw annually from their 401(k) without depleting it.  That leaves a big hole that a Social Security check won’t fill for this relatively affluent population – people whose employers offer a 401(k).

Where did all that wealth created by the longest economic boom in U.S. history go?  We baby boomers are a privileged lot, and if we want something, we are accustomed to having it.  We lament the spending proclivities of our adult children, yet we wrote the book on mass consumption.  The average house size more than doubled during our generation – the McMansion is a baby boom creation – and we filled it with “stuff.”  We pioneered the use of multiple credit cards to feed our shopping habit and home equity loans to go on vacations or send our children to the best colleges.  I couldn’t imagine my parents doing that, and I’m sure most of my cohort couldn’t either.

Baby boomers are a generation of spenders and they are now paying the price. Hopefully the following generations will recognize this and develop good savings habits.

Please comment or call to discuss this important issue.