ARE WE SAVING ENOUGH? Households and Retirement

The authors are respectively an economics writer in the Research Department, and Senior Vice President and Director of Research. The views expressed are the authors’ and not necessarily those of the Federal Reserve System. AR2007_pages_331:Layout 1 4/16/08 8:41 AM Page 4 On October 15 of last year, a retired school teacher from Earleville, Maryland, sat down at a computer terminal and typed responses to four “yes ” or “no ” questions, beginning with, “Are you at least 61 years and 9 months old? ” In answering affirm-atively, Kathleen Casey-Kirschling made history. Born one second after midnight New Year’s Day, 1946, she was the first of the 78-million-member baby boom generation to apply for Social Security benefits. She became eligible to collect with the turn of 2008. The reason Casey-Kirschling’s otherwise everyday act made news is no mystery. In part because there are so many baby boomers relative to the overall population, Social Security payments to retirees are projected to exceed payroll tax revenues in less than 10 years. By 2041, benefits will have to decline, or taxes or government borrowing will have to increase