As the baby-boom generation grows older, the number of people in the United States ages 65 and over is expected to roughly double by 2030. Moreover, that age group is forecast to grow from about 13 percent of the total population in 2000 to 20 percent in 2030 and to remain above 20 percent for at least several decades thereafter

If current trends persist, Social Security benefits will continue to rise along with wages, and expenditures per elderly Medicare or Medicaid beneficiary will also keep growing. Thus, baby-boomer households are expected--under current law--to receive a significant portion of their retirement income from Social Security and to have a large share of their medical and long-term care expenses paid by Medicare and Medicaid.

In the area of pensions, a declining proportion of the workforce is covered by defined-benefit plans, in which pension benefits are based primarily on salary levels and years of service. Moreover, a growing share of defined-benefit plans have been converted from traditional plans to cash-balance plans, in which benefits are defined by employers' contributions and guaranteed rates of return on those contributions. In addition, more workers are being covered by defined-contribution plans, whose benefits depend on workers' and employers' contributions and on uncertain returns on those savings. Thus, to some extent, defined-contribution plans conflate personal saving and pension saving.

Finally, many baby boomers' living arrangements differ from those of their parents in ways that could affect their financial status during retirement. Elderly boomers are more likely than elderly members of previous generations to be divorced or never to have married. Historically, unmarried people tend not to live as long as married people and so require less retirement wealth

As aging baby-boomers begin retiring, the effects on the overall economy and on certain occupations and industries will be substantial, creating a need for younger workers to fill the vacated jobs, many of which require relatively high levels of skill.

Several factors encourage older workers to stay in the workforce longer. First of all, the age requirement for receiving a full Social Security pension will eventually rise to 67 for those born in 1960 or later. Second, the trend toward offering defined contribution pension plans that will pay out more the longer you work, instead of defined benefit plans, which pay out at a specific retirement age, is encouraging workers to stay in the workforce longer. Third, and most importantly, older Americans are healthier than ever before and are less likely to want to take a traditional retirement just because they hit the golden age of 66.

As baby boomers near their retirement years they're discovering what previous retirees have been complaining about for years. There's lots of information on how to plan for retirement, but not nearly enough on how to plan retirement itself.

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