ON-Lion Letter
"For a number of years now, retirement and financial experts have bemoaned the fact that baby boomers and others who should be thinking about retirement saving are nowhere near ready to retire," according to a September study from the National Center for Policy Analysis (NCPA) in Dallas.  "Some blame the failure of 401(k) and Individual Retirement Account (IRA) retirement plans to fill in the gaps left by elimination of corporate pensions.  Others argue that American adults of all ages are simply not saving enough.

"Using data from the Bureau of Labor Statistics' Consumer Expenditure Survey, it is possible to compare the preretirement spending habits of today's middle-aged workers (45 to 54 years old) and today's older workers (55 to 64 years old) with the spending habits of those age groups 20 years ago," says "How Are Baby Boomers Spending Their Money?," by NCPA senior fellow Pamela Villarreal.

"What, if anything," Villareal asks, "changed over the past 20 years?  Real incomes for these age groups have not changed much.  But the portion of disposable income households spent on certain categories of goods and services has increased."

Baby boomers, according to her study, are demonstrably spending more on education, more on adult children, more on mortgage debt, and more on entertainment.

"The decision to forgo present consumption for future retirement savings is a matter of individual choice," Villareal concludes.  "Contrary to the belief that the savings rate has been stagnant, or even declined, retirement accounts appear to be playing a larger role for baby boomers.  However, retirement savings is nowhere near the 10 percent that is often recommended as the share of income that should be dedicated to savings."

The Lynde and Harry Bradley Foundation in Milwaukee supports NCPA.
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