After 30-plus years in her career, Donna is counting down the months until retirement. She gleefully shares with me everything she has planned for when she can do whatever she wants, whenever she wants. But in the middle of her excitement, something turns her mood. She clenches her fists and asks me demandingly, “Where are my grandbabies?”
Donna is not alone. While I can’t speak to her particular grandbaby-less predicament, I can say that her experience is part of a much bigger trend – one with serious implications for the Baby Boomers’ retirement plans.
The Center for Disease Control and Prevention released new data showing that the birthrate has dropped to an all-time low in the United States. It seems that the Millennials just aren’t having kids, or at least they’re not having them yet. The only cohort of women showing an uptick in first time births are women over 35 years old. In fact, the rate of first time births for women between ages 40 and 44 years old doubled between 1990-2012.
Observers have suggested a number of reasons why Millennials are proving slow to have children. Some point to economics. Although the recession has been over for nearly a decade, there may be a lasting economic insecurity that is causing young would-be parents to think twice before procreating. Others assert that student debt has delayed parenthood. Perhaps.
Given these pressures, pragmatic Millennials have simply concluded that raising children is too expensive. A recent New York Timesarticle interviewed a 32-year-old woman who wants to wait until her career is further along before having kids. “Once I achieve a certain level of success,” she says, “then I’ll start thinking about a family.”
Whatever the reason, the decision of Millennials to delay or forgo having children will have a ripple effect on wannabe Baby Boomer grandparents. No, I am not concerned about Donna’s desire for grandbabies. I am thinking about a far more practical issue – Donna’s financial security.
The majority of Baby Boomers’ wealth is not in the bank, in a pension plan or in an investment portfolio, but in their homes. Despite the popular urban mythology of Boomer life in the big city, more than 70% of Baby Boomers are still living in suburban and rural areas. An increasing number of soon-to-retire and recently retired Boomers are looking to downsize and cash out the decades of equity they have amassed in their homes as a source of income and a chance to live the good life. But how can they cash out without any buyers?