Friday, December 26, 2008

The Mystery of the Baby Boomers and the Missing Savings Peak

The McKinsey Global Institute has published a comprehensive examination of the The Economic Impact of Aging U.S. Baby Boomers. Compared to earlier generations the Baby Boomers have earned more, but saved less. Exhibit 4 from the report illustrates the savings rate for the boomers and the preceding Silent Generation. Noticeably missing is a boomer savings peak in the 40s and 50s. The report attributes this to the wealth effect from asset appreciation and easy access to credit, both of which have been hurt by the current financial crisis. The likely result is a longer worklife.

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