Boomers trying to stay afloat

The first wave of baby boomers is drifting toward retirement, but many boomers are ill-prepared for the financial rapids that await them.

Leading causes for their problems are rising debt levels, equity-stripping home loans and a general lack of knowledge about retirement finance.

In fact, "even though boomers are moving closer to retirement age," an AARP report in May said, "they are no more likely to feel prepared financially for this phase of their lives now than five years ago."

By 2008, early boomers (those born between 1946 and 1955) will begin turning 62 years old. And with the average 60-year-old expected to live 22 more years, boomers could find their nest eggs empty before their time is up.

According to Dr. Robert Butler, president and chief executive of the Manhattan-based International Longevity Center-USA, an affiliate of the Mount Sinai School of Medicine, boomers have saved on average just $100,000.

"But to have even a reasonably adequate nest egg, the early boomers would have to by now have a median wealth of $589,000, the late boomers $609,000," Butler told the Deseret Morning News and other journalists earlier this month in New York at the 2004 Age Boom Academy. "They are a far cry from that."

Sterling Jenson, senior managing director for Wells Capital Management in Salt Lake City, said some boomers are targeting savings of $1 million or more because future interest rate returns on investments could be at much lower levels compared to historical earnings.

"It will take a much bigger nest egg," Jenson said. "I think if you looked at that number ($1 million) there's very few people in the baby boom population that have saved that amount of money."

However, it may take that kind of money should financial markets take another nosedive or private-sector pensions continue to fail.

The overall market return of Standard & Poor's 500 Composite Index was negative in 2000, 2001 and 2002 — the first three-year decline since 1939 to 1941 — a disaster for many 401(k)s.

In 2003, the market came back, Jenson said, but so far in 2004 returns are flat.

"It's going to take a heck of a lot more to retire," Jenson said. "A lot of people just don't think that Social Security is going to be there to supplement them, or at least not to the degree that they have thought in the past. So I think more and more baby boomers are planning to work through retirement, . . . to supplement their income with part-time work or something."