Wealthier Than They Used To Be, Not As Wealthy As They Should Be

It’s not that baby boomers have failed to accumulate some wealth as they move inexorably toward their retirement years. They just haven’t accumulated enough. That’s one conclusion of a new report by AARP’s Public Policy Institute on the wealth held by boomers and various boomer subsets. The report looks at trends in boomers’ non-annuitized wealth (defined as total wealth excluding Social Security and defined benefit pensions) in the years 1989 to 2001.

Overall, the median net worth of boomer households has risen steeply, from $35,951 in 1989 to $107,150 in 2001 (in 2001 dollars). As you’d expect, home equity is the single biggest chunk of boomers’ wealth. As you might not expect, boomers’ financial assets (i.e., everything but home equity) grew at a faster pace than their total household wealth, climbing from a median $13,410 in 1989 to $50,700 in 2001. Does this mean the shrewd boomers were the ones who put all their funds in stocks and never bought a home? Actually, such people (shrewd or not) scarcely exist. One of the report’s striking points is that boomers who don’t own a home tend not to own much of anything. In 2001, boomer homeowning households had median net worth of $174,900; those who didn’t own a home had median net worth of $6,720. It’s not just that homeowners had benefited from the upswing in housing values. Subtracting home equity from their total net worth, homeowning households still had median assets of $91,400. The report says experts have inferred that people who save at all tend to do so in multiple ways. “In other words, some households have a propensity or ‘taste’ for saving, and others don’t.”

If married boomers feel an occasional pang of envy for their footloose peers, they can take solace in knowing they’re the wealthier cohort. The median net worth of married boomer households in 2001 was $164,940, vs. $54,700 for households headed by (or consisting solely of) an unmarried man and $29,080 for single-female households. However, singles saw their wealth rise more sharply than did the marrieds. In 1989, the median figures were $67,764 for marrieds, $15,878 for single men and $2,554 for single women. Thus, the marrieds’ median net worth grew by 143 percent, single men’s by 245 percent and single women’s by 1,038 percent.

Despite the growth in their wealth, boomers don’t have enough to retire on. As the report says, “the median net worth of just over $100,000 would not be sufficient without Social Security and [defined benefit] pensions to feel comfortable about boomers’ retirement security.” It seems old age will give boomers a chance to live the simple life they blathered about in their younger days.