Retirement Income Shifts Challenges Young Baby Boomers: EBRI

May 1, 2001 ( - The movement away from traditional defined benefit pension plans has translated into a foggier financial future for Baby Boomer retirees, according to a new study by Employee Benefit Research Institute (EBRI).

The research focuses on the long-term implications of the trend towards defined contribution plans and the decline in defined benefit plans and, through its Retirement Income Projection Model, quantifies the increasing importance of individual account plans.

It focuses on the expected increase in retirees’ reliance on income from sources that are not guaranteed for life – a change that puts many Americans at increased risk of outliving their resources if they do not plan wisely and save for retirement.

The model shows that for today’s retirees:

  • approximately 39% of pension wealth for males would be available from defined benefit plans and 49.7% for females
  • defined contribution and cash balance plans would provide 33.2% for men and 32.5% for women
  • IRA’s would provide  27.8% for men and 17.8% for women.

Baby Baby Boomers

In comparison, studies on the youngest of this generation, those born in 1964, show that:

  • just over 26.4% of pension wealth for males will be provided through defined benefit plans, a decline of 32.4% compared with today’s retirees
  • while their female counterparts will see their defined benefit pension wealth fall to 37.2%, a decline of 25%.

Also in this group:

  • defined contribution plans will provide 33.7% of retirement wealth for men, and 31.9% for women
  • while IRAs will reach 39.9% for men and 30.9 % for women.