Many countries are feeling the effects of the post-WWII baby boom as that generation faces retirement. Developed countries struggling with budget woes and austerity measures question the sustainability of government-sponsored retirement or pension programs. In an effort to mitigate rising costs, several countries are pushing unpopular legislation to increase the retirement age. Retirement schemes differ by country, depending on variables such as year of birth, gender, and number of years an individual has paid into the system.

We look at Boomers in the United States, where the full-retirement age for people born between 1943 and 1954 is 66, to understand better what retirement options exist. We use consumer data from two sources: household-level data from Strategic Business Insights' (SBI's) Consumer Financial Decisions' (CFD's) proprietary 2012–13 MacroMonitor—a macroeconomic survey of US households—and individual-level data from spring 2012 VALS™/GfK MRI's Survey of the American Consumer.

US Baby Boomers (1946–64) constitute almost one-third of US adults (73.3 million) and slightly more than one-third of US households (44 million). Roughly one in five household heads are retired; of the remainder, nearly four in five are within 15 years and 20% are within 5 years of retirement. However, three out of five Boomer households have less than $100,000 in total financial assets. For the 26 million Boomers with modest financial assets, insufficient time remains to boost their balance sheets and retire on schedule. "For them, retirement is not an option, it's a dream," summarizes Larry Cohen, CFD director.

"Are you financially secure?" in the 21 February 2013 CNN Money suggests that the percent of individuals in the United States unable to retire may realistically be much higher. A recent Fidelity Investments study finds that "today's average 65-year-old couple will need $240,000 to pay out-of-pocket health care costs in retirement, not including long-term care." This cost is out of reach for the majority of US couples. According to a Wells Fargo wealth survey, even the majority (75%) of people with $250,000 or more in investable assets reckon the amount they will need for postretirement health care is $60,000. Clearly, future health-care costs are difficult to estimate but will exceed most people's ability to pay.

Few retirement options exist. Faced with modest assets, some Boomers plan to keep working. However, this option might not be feasible, "because health issues may force a workplace exit or because analog work skills may not match today's need for digital skills," explains Cohen. As the cost of living increases, some Boomers (previously retired) are reentering the workforce, effecting a "revolving retirement." Cohen first spotted this trend and coined the phrase in 2001. However, the majority of retirement dreamers are, at best, able to find only hourly work. The majority will have to live in further reduced circumstances and rely on modest—if any—savings and investments, Social Security payments, Medicare, and nongovernment social-services programs. Some 30% of retirement-dreamer households are not retired and not preparing to do so.

Many modest-asset Boomers are, and have been, hardworking members of society, frequently providing services—such as the trades—that make society run smoothly. Constrained by income, 70% earn $50,000 or less annually. To illustrate their tight financial circumstances: In 2011, slightly more than one-quarter had no federal income-tax liability. Education (fewer than one in five have a four-year college degree) and income are easily identifiable group descriptors. Because it's difficult to think about retirement while struggling to pay monthly bills, households with modest incomes must always focus on the present; they have insufficient cash to think about saving, and they lack both money and self-confidence to invest. Three in five households are worried about just keeping up; moving ahead seems outside the realm of possibility. By necessity, retirement dreamers must husband their resources—they are extremely risk averse. Half have no financial strategy.

As is true of any large group of people, all members of the Baby Boom generation are not the same. The majority of retirement dreamers fall into one of four consumer groups that SBI's VALS™ identifies as Believers, Strivers, Makers, and Survivors. Advertisers infrequently target these consumers except for basic products, yet understanding the differences between the groups is very important for government agencies and organizations that service these citizens. For example, Believers are very trustful of government and authority but lack sophisticated understanding. Fiercely independent, Makers are resentful and distrustful of government (as they are of most large institutions). Strivers are cynical and believe that life's unfair; they have a victim mentality and at the same time feel entitled to have what others with high resources own; their expectations of government help are unrealistic. Survivors are respectful and courteous and expect to be treated in kind; generally, they appreciate whatever help they receive.

Few tools, other than VALS, are available to organizations that need to understand and reach retirement dreamers or similar populations. Inviting participation and encouraging compliance among modest-asset customers is far different than appealing to individuals with higher resources. For example, understanding the ways in which dreamers differ and how to use their psychology to motivate desired responses can increase the effectiveness of communications dramatically.