ثروت بازنشستگی از نسل دوران شکوفایی

The paper compares the well-being of the baby boom generation (ages 40–55) in 2001 with the same age group in 1983. I find little evidence that their relative position deteriorated over the period. By some indicators, this generation has seen an improvement. In terms of income, the 40–55 age group was at about the same relative position in 2001 as in 1983. In terms of conventional wealth, there was some slippage over the period. In terms of mean augmented wealth (net worth plus pension and Social Security wealth), their relative position improved somewhat but in terms of median augmented wealth there was again some slippage

The baby boom generation (individuals born between 1946 and 1961) had a rocky start economically as a result of its large cohort size. They experienced depressed earnings when entering the labor market in the 1970s (see Berger, 1983, Berger, 1984 and Berger, 1985), as well as low rates of return to schooling (see Freeman, 1976). Indeed, Berger (1985) predicted for the baby boom cohort that the negative effect of its large cohort size would continue to depress earnings as the cohort aged. In contrast, Easterlin et al. (1990) found that during the 1980s the economic well-being of the baby boomers was higher than that of their predecessors. Moreover, the baby boom generation shared an increase in income inequality during the 1980s that was common to all cohorts during this period. Sabelhaus and Manchester (1996) also found evidence that the baby boomers in 1989 were doing better than their parent's generation at a similar point in their life-cycle. In particular, by 1989 baby boomers accumulated more wealth relative to income than their parents had. This generation also lived through the economic booms of the 1980s and 1990s. The latter half of the 1990s, in particular, was characterized by the stock market boom and a large accretion in share values. This period is also of particular interest because it has seen one of the most dramatic changes in the retirement income system since the end of World War II. In particular, the last two decades have witnessed a dramatic decline in traditional defined benefit (DB) pension plans and a corresponding rise in defined contribution (DC) pensions. Other salient changes over these years were the increased labor force participation of females, particularly wives, which helped augment family pension wealth and Social Security wealth (SSW); rising longevity, which also increased both pension wealth and SSW; and a sharp increase in the divorce rate and the number of families headed by single females, which would tend to lower household net worth (NW), as well as pension wealth and SSW. The paper analyzes the wealth holdings of the baby boom generation (ages 40–55) in 2001 and compares their wealth holdings with those of the same age group in 1983 and 1989.1 The key contribution is to use a measure of “augmented wealth”, which includes not only standard NW but also estimates of both pension wealth and SSW. The paper will analyze changes in both mean and median augmented wealth of this age group over this period, as well as its various components, particularly pension wealth and SSW. It will also investigate changes in the inequality of augmented wealth of this age group over this period. The primary interest of the paper is whether this generation has made up for lost ground by the early 2000s. In particular, how does this generation stack up in comparison to the same age group 18 years earlier. The results of the paper also shed light on the importance of Social Security as a source of retirement income for the baby boom generation, as well as the potential deleterious effects of the transformation of the pension system from DB to DC pensions on the well-being of the average worker. The latter may have important implications for pension policy in this country. The principal data sources used for this study are the 1983, 1989, and 2001 survey of consumer finances (SCF) conducted by the Federal Reserve Board. Each survey consists of a core representative sample combined with a high-income supplement. The SCF provides considerable detail on both pension plans and Social Security for both husband and wife. Section 2 provides a review of the pertinent literature on retirement wealth. Section 3 describes the data sources and develops the accounting framework used in the analysis. Section 4 shows time trends in standard measures of household wealth over the 1983–2001 period. 5 and 6 investigate changes in pension wealth and SSW, respectively, over this period. Section 7 presents summary measures on total (augmented) household wealth for the whole age group, as well as by racial/ethnic group and household type. Concluding remarks are made in Section 8.

By conventional wealth measures, the period from 1983 to 2001 was one of robust growth. Mean net worth (NW) surged by 65 percent among all households, while median NW gained 24 percent among all households. Gains in median wealth outstripped the 14 percent increase in median (CPS) income over this period. However, the 1980s and 1990s also witnessed the devolution of the traditional defined benefit (DB) pension system in favor of defined contribution (DC) pension coverage. Despite the transformation of the pension system, I find little evidence that the relative position of the baby boom generation deteriorated over the period from 1983 to 2001. In fact, by some indicators, this generation has seen an improvement in its relative position. First, in terms of income, the 40–55 age group was just about at the same relative position in 2001 as in 1983. However, in terms of conventional wealth, there was some slippage over the period. Yet, despite this, the ratio of wealth to (SCF) income rose over the period, as Sabelhaus and Manchester (1996) had found. Second, a big increase occurred in income inequality for this age group over the period, somewhat more than the change observed for all households. As Easterlin et al. (1990) found, rising income inequality for this age group did track rather closely with that for the population as a whole. There was also a modest increase in conventional wealth inequality for this age group – about the same order of magnitude as occurred for all households. Third, at least relative to age group 65 and over, the mean pension wealth PW* was much higher and mean post-tax PW* of age group 40–55 was somewhat higher in 2001 than in 1983. Fourth, over the 1983–2001 period mean augmented wealth AW* among age group 40–55 grew at a faster rate than mean AW* among the elderly while mean post-tax AW* grew at about the same rate. On the other hand, median AW* and post-tax AW* grew slower for age group 40–55 than for the elderly. Over the 1989–2001 period gains in both mean and median augmented wealth among the baby boom age group outpaced increases among all households. However, in absolute terms, median post-tax AW* increased by only 6 percent over the 18 years. Fifth, there was a very large increase in the inequality of retirement wealth, augmented wealth AW* and post-tax AW* among age group 40–55 over the 1983–2001 period. This contrasts with corresponding time trends for elderly households, who experienced almost no change in the inequality of retirement wealth or augmented wealth. However, over the years 1989 to 2001, inequality of augmented wealth declined for age group 40–55 while it increased for all households. Despite (or, perhaps, because of) the transformation of the pension system, pension wealth was more important in the overall augmented wealth (AW*) portfolio of age group 40–55 in 2001 than in 1983. The growth in pension wealth as a share of augmented wealth was largely offset by the decline in the share of NW less DC wealth in total augmented wealth. The share of SSW also fell somewhat over the period. The pattern varies by income class. Among the bottom 40 percent of the income distribution, SSW was the main component of augmented wealth AW* in 2001, and it increased substantially in importance over the 1983–2001 period for the bottom income quintile. Among the third and fourth quintiles, there was an almost even split among the three components of augmented wealth. For these households, NW less DC and SSW declined in relative terms while pension wealth increased sharply in relative terms. Among the top quintile, the dominant component of augmented wealth was NW, followed by pension wealth and then SSW. Here, too, NW and SSW declined, while pension wealth increased in relative terms over the 1983–2001 period. In terms of the actual magnitude of augmented wealth AW*, percentage gains were much greater for upper income quintiles than for the bottom quintiles. Perhaps, the most notable finding with regard to racial differences is the marked deterioration in the position of African-Americans and Hispanics relative to non-Hispanic whites in terms of median NW, median retirement wealth, and median augmented wealth (AW*) over the years 1983 to 2001. By 2001, the ratio of median NW stood at 0.12, that of retirement wealth at 0.46, and the ratio of AW* at 0.32. With regard to differences by family type, the most salient finding is how poorly single females fared over the 1983–2001 period. Their median NW actually fell over this period, their mean pension wealth barely advanced, their mean SSW rose only 16 percent, and their median retirement wealth did not change at all. As a result, the ratio of mean augmented wealth between single females and married couples fell from 0.39 in 1983 to 0.30–0.31 in 2001 and the ratio of median augmented wealth (AW*) declined sharply from 0.42 to 0.26.