Happy Friday, MarketWatchers.
The median age in the U.S. is creeping toward 40 years — 38.9 to be exact — the Census Bureau said this week. This means that as a country, we’re aging fast. The birth rate is declining and if this keeps up, the U.S. median age will continue to climb. In 2000, the median age was 35; in 1980, it was 30.
In his column, Paul Brandus points out that this has “profound implications for a variety of overlapping areas, such as economic development, national security and social programs like Social Security, Medicare and Medicaid.”
Brandus calls it the baby boomer effect. Of the 76 million people born between 1946 and 1964, most of them are now solidly in retirement age. And their kids — the echo boomers — are pushing the median age higher. It will be interesting to see how this demographic bulge echoes through our economy over the coming years.
Speaking of boomers, many are worried about a recession coming just as they’re entering retirement, writes Brett Arends. With home prices soaring it’s pushing them to sell their house to shore up some cash and reduce their expenses in case the economy goes south. “It’s hard to fault the logic,” Arends wrote. “These home prices surely can’t last forever.”
One bit of surprising news in the retirement universe this week was the release of the closely watched Fidelity Investments estimate of retiree healthcare costs. For a couple retiring in 2023, they can expect to spend $315,000 on healthcare — this was flat with last year’s estimate. This was the first time since 2014 that estimated healthcare costs have been unchanged year over year, reported Alessandra Malito. It’s not that healthcare costs haven’t been rising — they have. The estimate remained flat because provisions under the Inflation Reduction Act targeting Medicare have offset the rising costs of healthcare.
But make no mistake, $315,000 for a couple and $157,500 for a single person is still a lot of money. Fidelity said that most people drastically underestimate their retirement health spending: 2022 research showed that Americans expected a couple to spend $41,000 on healthcare.
People of (almost) all ages are feeling stressed. According to a report from Northwestern Mutual Americans think they’ll need $1.27 million to retire comfortably, up from $1.25 million last year, and they plan to work longer to save up. The scary thing about that, writes Jessica Hall, is the gap between what people have now and what they think they’ll need. The average amount that U.S. adults have saved for retirement is only $89,300, up 3% from $86,869 in 2022, Northwestern Mutual found. The gloom is pretty constant among boomers, Generation X and millennials. Optimism is still alive and well among Generation Z. They feel confident they’ll have enough to retire, even though they plan to retire at age 60 and live to 100.
I’ll have what they’re having.
Check out our newsletter and the rest of our retirement coverage. Enjoy your weekend.
If you have questions about retirement, Social Security, where to live or how to afford it at all, write to us at HelpMeRetire@marketwatch.com and we may use your question in a future story.
