Baby Boomers are “exhausted and emotionally frustrated with Wall Street.” As a result, “they are doing nothing and will not be able to retire,” Frank Troise from the company SoHo Asset Management told CNBC last week.
Boomers were initially advised that they would see an 8 percent return in the market over 20 years. So, they built in this expectation for the long term.
When the financial crisis hit they were devastated by the crushing blows to their 401ks—the average loss to 401ks, 24.3 percent.
In order for Boomers to get back to their target goal of 8 percent and still be able to retire by age 65, the investor needs to recover the money that was lost. For example: An investor who is 40 years old and lost 30 percent of their 401k will now need an annual rate of return of 9.55 percent (per year) until they reach 65 years old. (See the graph for full breakdown.)
Yet, another reason why baby boomers will need to rely on reverse mortgages in order to live comfortably during retirement.
