America's next retirement crisis could be that baby boomers are living too long

Baby boomers are expected to live longer than previous generations — and it's creating retirement challenges.
Living longer means boomers now either have to work longer to support themselves or have to worry about outliving their savings.
Working longer, however, is not an option for many.

Baby boomers are expected to live longer than previous generations, and it's giving them anxiety about retirement.

Though people say they're happiest when they get older, many baby boomers — born from the 1940s to the 1960s — feel pressured to work longer to support themselves or, if unable to work, are worried about outliving their savings.

Just 23% of baby boomers think that their savings will last through retirement or that they have done a good job preparing for retirement, according to a survey by the Insured Retirement Institute, a trade association for the retirement industry, from earlier this year. Only 54% had any retirement savings at all, and only 40% had tried to calculate how much money they would need to retire.

The survey also found that about 60% of boomers thought their retirement income would cover basic expenses and leave some extra for travel and fun — which is the kind of thinking that could lead boomers to run out of money.

Some are working longer, but thats not an option for everyone

Some Americans are working around this problem by staying employed far into their 70s, at least in part-time positions. But working longer is not a realistic option for every person approaching the traditional retirement age.

The job market is in a transition period in which many roles are being automated, especially in manufacturing firms. For those who lose their job at an older age, it is not always easy to learn new skills or return to school. Physically demanding jobs, meanwhile, are often difficult for older workers.

And so, people who plan to retire in their mid-60s to early 70s need to have enough money saved up for a decade or two more than they might have in the past.

Longevity is "one of the greatest financial challenges faced by our clients today," Larry Fink, the CEO and chairman of BlackRock, said earlier this year in his annual letter to shareholders.

He described the longevity problem as an underappreciated contributor to Americans' financial anxieties.

Not just a problem in the US, however

Crucially, this isn't just a problem in the US, and it's not even a new issue. Fewer children are being born relative to the number of elderly adults in the world, something economists have observed for a while.

And within a few years, just before 2020, elderly adults will begin to outnumber young children, according to a projection by the US Census Bureau.

This trend is likely to continue. The Census Bureau estimates that by 2050 those ages 65 and up will make up 15.6% of the global population — more than double that of children ages 5 and under, who will make up an estimated 7.2%.

If these projections hold, there will be far more older residents entering retirement with far fewer working-age citizens around to support them — which could add another wrinkle to the longevity problem.