Boomers aren't ready for retirement. Millennials and Gen Z are going to pay the price.

The great baby-boomer retirement wave is upon us. According to Census Bureau data, 44% of boomers are at retirement age and millions more are soon to join them. By 2030, the largest generation to enter retirement will all be older than 65.

The general assumption is that boomers will have a comfortable retirement. Coasting on their accumulated wealth from three decades as America's dominant economic force, boomers will sail off into their golden years to sip on margaritas on cruises and luxuriate in their well-appointed homes. After all, Federal Reserve data shows that while the 56 million Americans over 65 make up just 17% of the population, they hold more than half of America's wealth — $96.4 trillion.

But there's a flaw in the narrative of a sunny boomer retirement: A lot of older Americans are not set up for their later years. Yes, many members of the generation are loaded, but many more are not. Like every age cohort, there's significant wealth inequality among retirees — and it's gotten worse in the past decade. Despite holding more than half of the nation's wealth, many boomers don't have enough money to cover the costs of long-term care, and 43% of 55- to 64-year-olds had no retirement savings at all in 2022. That year, 30% of people over 65 were economically insecure, meaning they made less than $27,180 for a single person. And since younger boomers are less financially prepared for retirement than their older boomer siblings, the problem is bound to get worse.

As boomers continue to age out of the workforce, it's going to put strain on the healthcare system, government programs, and the economy. That means more young people are going to be financially responsible for their parents, more government spending will be allocated to older folks, and economic growth could slow.

"The system has failed in thinking from a long-term perspective," Rita Choula, the senior director at the AARP Public Policy Institute, told me. And that failure is falling on the shoulders of young people.

Not all boomers are rich

It's undeniable that some boomers will enjoy a cushy retirement. The Fed's most recent Survey of Consumer Finances found that the average net worth for people ages 65 to 74 was $1.8 million, the wealthiest age cohort in the survey. But this aggregate number hides the fact that the financial outlook for many of America's retirees is bleak.

Average net worths can get inflated when there's a lot of wealth held by a few people. A more accurate indication is median net worth, which prevents the ultrarich from skewing the picture. In the Fed's survey, half of Americans ages 65 to 74 said they had less than $410,000 to supplement Social Security and fund their retirement — much of which might be tied up in real estate. The median retirement account for that age group has only $200,000 — meaning that half of 65- to 74-year-olds have even less saved up. Given these numbers, it's clear that a significant proportion of boomers are not set up for their final years. In fact, the National Council on Aging estimates that 17 million people over 65 are considered economically insecure.

The median income of people 75 and older is $49,000, which includes an average Social Security benefit of $21,162 a year. Someone who owns their house outright, which is true of 81% of people older than 75, could enjoy a comfortable life on this income. But if they live in a more expensive area or begin to need outside help with daily activities, that income can become insufficient in a hurry. And that's just for people in the middle of the wealth distribution.

Even the best-laid retirement plans often go awry as people age. I recently wrote about my husband's grandmother who eventually needed to be in a nursing home when she got older. The care was essential to giving her a good life, but it ate up the $250,000 nest egg she had built up. Her experience isn't unique; the median national cost of homemaker services is $163 a day, and the median cost of a semiprivate room at a nursing home is $94,900 a year, the Genworth long-term-care survey found. Neither of these costs are covered by Medicare. And when money is taken out of savings to pay for care, the income generated by that stash grows progressively smaller.

The rising cost of care and the precarity of many older folks' finances have pushed many boomers to work longer, put off getting care, or move to a Medicaid-funded nursing home at a younger age than they had wanted. Instead of a final act that allows them to enjoy life, many boomers are facing a tough road ahead — and their younger family members will be forced to carry the burden.

The Sandwich Generation

Stevie Kuenn, a marketing executive in Chicago, has a lot on her plate. In addition to her full-time job and the responsibility of raising her 12-year-old daughter, Kuenn has recently been helping to care for her 91-year-old mother-in-law. Her family is fortunate, she said, that her mother-in-law had saved some money, but the responsibility of caring for her is still taking a toll. For years, her mother-in-law lived hundreds of miles away in Ohio. When there was an emergency, it was often challenging to help. One time, they had to end a family vacation early to help during a health scare. Another time, Kuenn returned home early from a business trip so that she could watch her daughter while her husband traveled to Ohio. The back-and-forth eventually became too much, and Kuenn moved her mother-in-law closer to the family in Chicago. But things such as dealing with healthcare continue to surprise them.

"There is no safety net," Kuenn said about figuring out eldercare. "We weren't prepared for the burden of making sure her Medicare gets renewed."

Kuenn is part of the so-called Sandwich Generation, people who are caring for both aging parents and young children at the same time. In a 2021 Pew survey, 23% of Americans said they had both a parent over 65 and a child they were supporting. And more and more people are juggling these caregiving duties with a job: Choula of the AARP told me that 60% of family caregivers were working a full- or part-time job while, doing an average of 20 hours of unpaid care a week. For people like Kuenn, the demands of Girl Scout cookie deliveries, work calls, Medicare forms, and doctor appointments can be emotionally and financially taxing.

"If we're looking at it from an economic standpoint, sometimes it becomes nearly impossible," Choula said of this juggling act. As a result, some family caregivers, often women, step out of the workforce. A 2019 survey by AARP and National Alliance for Caregiving found that 15% of caregivers said they reduced their work hours in the past 12 months, 14% said they took a leave of absence, and 11% said they either quit or retired early. That lost income has a downstream effect. Choula said that these caregivers spent an average of $7,200 each year out of their own pockets to support their relatives. And as more people retire, the problem is going to get worse.

"We're talking about individuals who are not putting money into their retirement, or they're not putting money into their children's education," she said. "That can have long-term generational impacts on wealth, particularly when we look at communities of color."

A hit to the economy

While many families are starting to figure out how to care for their boomer relatives as they age, the impact of the "Me" generation's graying will also fall on society more broadly.

For one thing, a growing share of the older cohort — an estimated 6.6% of those over 55 — don't have spouses or children to help care for them. But even for those with assistance, a dearth of care infrastructure is going to make their retirement years far from comfortable. Right now, the US has about 15,000 long-term-care facilities, and analysts at SeniorLiving.org estimate that the number needs to grow by 20% in the next six years. But nursing-home availability is trending in the opposite direction. Since 2020, 579 nursing homes have shut down, resulting in more than 45,000 fewer nursing-home beds than before the pandemic, the American Health Care Association found. As demand has increased, more than half of nursing homes have said they have had to turn people away, the organization found.

One reason that long-term care is scarce and expensive is that it's labor-intensive. It's hard, responsible, and empathetic work, and the industry is short on staff. In 2023, 77% of nursing homes reported staffing shortages. It has long been an attractive field for immigrants, and the good news is that there has been a recent increase in immigration after the pandemic decline. In 2022, the Department of Homeland Security reported that 1 million immigrants legally arrived in the US, an increase over 2020 and 2021 levels. But without more caregivers and nursing homes, America's retirees are going to be left depending on their cash-strapped millennial children and Gen Z grandchildren.

More broadly, the government will need to allocate more spending to older people. Whether it's maintaining current levels of Social Security benefits, expanding county guardianship programs to handle care for nursing-home residents who have no friends or family, or simply losing tax revenue from people who no longer work, the growing retiree population is creating a financial burden that America has not prepared to manage. The lost productivity and higher tax rates will create a drag on the economy that will be difficult for working-age folks to overcome.

Federal programs such as Social Security, Medicare, and Medicaid are crucial for retirees, but they're far from enough, especially as the population ages. Without more federal support, the burden of caring for older people falls on younger family members who are spending their own time and money trying to start their own families. Unless the US figures out how to adapt to its aging economy, young people are going to end up shouldering more and more of the work.

Ann C. Logue is a writer specializing in business and finance. Her most recent book is "Options Trading." She lives in Chicago.