Meet the boomers cashing in on the golden age of retirement

“It’s perfectly comfortable. We absolutely have all the money we need to live our lives,” he said. And this nest egg has made a big emotional difference: He has no financial stress.

It’s a similar story for Connie, a 79-year-old who said she didn’t really start planning for retirement until she was in her 30s, newly divorced and working a state government job in Oregon. After about 20 years in the public sector, she was able to retire with a good pension – a the kind of benefit that is increasingly rare these days. Her Social Security checks were also strengthened when her ex-husband’s survivor benefits began. In retirement, she earns more than her previous salary.

“It gives me great peace of mind,” Connie said. It also fills her with a certain pride: her research and saving paid off.

“I definitely fall into that category of people who just had a completely ordinary career and never made a lot of money, and yet now my retirement income is probably one and a half times what I ever made working.” she said.

The three retirees Business Insider spoke to for this story are bright spots amid a retirement crisis in which more than half of Americans age 65 and older are living on just $30,000 a year and Social Security funds are expected to begin drying up in 2035. without legislative intervention. All of their full names are known to BI, but their last names have been withheld due to privacy concerns.

While the way we save for retirement has evolved, some people are now cashing in on the golden age of retirement savings — when benefits were more generous and real estate and stock investments boomed. While it is still possible to achieve, a fat retirement account has become rarer. And the retirees who are living that dream are grateful.

“Being retired and not having any financial stress and being able to help our kids and travel to see them and things like that, it’s just a fantastic place to be,” Michael said.

The accumulation of factors that led to the flushing of retirement accounts

A sustainable retirement based on a lifetime of savings and smart decisions is possible – Michael and Connie are examples of this. But it’s also an increasingly rare reality, especially for lower-income Americans.

The Government Accountability Office found in a 2023 report that the lowest-income households ages 51 to 64 — those earning about an average of $19,100 — are increasingly less likely to have anything in a retirement account.

In 2007, according to the GAO’s Survey of Consumer Finances, about 21% of low-income households had a retirement account balance. By 2019, this had fallen to 10%. While the losses weren’t as deep for those in the middle-income quintile, their retirement account balances fell slightly from 2007 to 2019. As the GAO finds: “For all but the highest income group, there was no discernible difference between average balances in 2019 and 2007.

Dropping one type of account, in particular, may be to blame. In recent decades, the US has moved away from pensions, in which employers provide ongoing payments to former employees in their post-working years. Now, more American workers have defined contribution plans, like 401(k)s, which rely on workers to contribute funds to grow their coffers.

The proportion of low-income households with a defined benefit pension also fell by half from 2007 to 2019.

Michael acknowledges that some people have likely worked hard all their lives but haven’t had higher-paying jobs – meaning they’ve been able to put away less.

“Retirement could have gone the other way for us. I could have made some bad decisions and we could have lost a lot of money and it would have been a different scenario in terms of comfort,” he said.

“We got lucky with some investments and it just took off and grew,” added Michael.

The wealth held by today’s retirees is also booming; 401(k) investments have been boosted by a rising stock market, which means that people who take money in retirement investments are now in the winning end of the S&P 500’s all-time highs.

“If we look at someone who had a 401(k) early enough, between 1982 and 2002, we had stock market returns that went pretty high,” David John, senior policy adviser at AARP, told BI. He added: “They managed to build retirement savings at a time when there were both returns on the stock market but also fairly low inflation.”

Connie chose a variable account to fund her retirement – her employers’ contributions went into investments, rather than promising a fixed return each year. While her account lost a few years ago due to the market, overall, her income has exceeded what she would have with a purely fixed amount.

“There are a lot fewer pensions out there these days. That’s true,” Connie said.

And for the current group of retirees with these benefits, another thing may be boosting their bottom lines: Boomers are holding extremely valuable real estate. Thirty years ago, when today’s retirees may have started buying real estate, homes sold for an average of about $130,000. Today, they’ll go for nearly $300,000 more.

Today’s retirees also still have full Social Security benefits, something that is increasingly at risk for the next generation of workers who are throwing in the towel. All of this comes as retirement savings become more of an individual burden.

“Basically, the people who need it the most are the ones who are least likely to have a retirement savings plan or a pension,” John said.

Some have still been able to achieve this stability, but it is more of an uphill battle

Valerie, 46, is one of the Gen Xers trying to follow in the footsteps of the affluent. Valerie, who is based in Seattle, has now retired. According to filings seen by BI, she has over a million in her 401(k), but has struggled mightily. Valerie—a former retail worker—tried investing in real estate, but ended up on the other side of a tough market: Her properties foreclosed during the mortgage crisis, she said, and she “barely had $20 per survivors”.

“I kept thinking about all these other ideas of, well, how do I build wealth again? So I just give up? Is this the end of my life?” she said. For Valerie, the answer ended up in her 401(k) — she said she would borrow against it to invest back into the market and then pay off those loans. Now that she has a secured retirement plan, she is more willing to take risks to build more wealth.

“When I was 18 to 19 years old, I remember predicting that I would be where I am financially in my retirement account if I didn’t touch it and didn’t bother it. And sure enough, the math is right,” she said.

Valerie is one data point that shows it’s not all bad news for future retirees either, but instead perhaps more of an uphill battle.

“We have a rapidly changing economy and there will be opportunities for increased investment, savings and new products. I mean, there’s an amazing amount of innovation going on out there,” John said. There’s a chance it won’t be as easy as it was for someone “who started investing in say the 1980s or 1990s and is now reaching the end of their career,” he said.

“But yes, going forward, it’s still possible.”

Are you well into retirement, or are you worried you won’t be able to retire? Contact this reporter at jkaplan@businessinsider.com.