Is Your Retirement at Risk?
Fortune (03/17/03) Vol. 147, No. 5 p.58; Morris, Betsy

Baby boomers, who looked confidently into the future as their incomes and savings flourished during the 1990s, are now faced with an increasing financial crisis. Booming incomes and savings, which thrived during what one expert calls "the bull market of our lifetime," are now dwindling as the market continues to decline in the wake of huge corporate scandals, increasing security concerns, and the souring economy. Baby boomers, who had previously considered their retirements a sure thing, are now being faced with lowered salaries, increasing insecurity about their employment, and reduced retirement savings. During the 1990s, corporate profits rose at a rate twice their historical average and stock returns rose at a rate of about 18 percent per year, but today stock returns are down around 10 percent and, according to the Federal Reserve, the ratio of household net worth to disposable income has fallen to 4.9, the same level it was in 1994. Economic uncertainties are provoking companies to cut back their pension and health benefits for current and former employees, and have damaged Social Security funds for soon-to-be and future retirees. According to the Conference Board Investor, consumer confidence last month declined by 15 points, signaling that baby boomers no longer feel financially secure. Increasingly, more and more baby boomers, who were expecting to retire soon, are choosing to remain in the workforce, in hopes of replenishing their shrinking savings.

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