Lee Manchester, 61, in Wellfleet, Mass. © Kelvin Ma, Bloomberg

Lee Manchester, 61

Eighty-seven-year-old Lew Manchester has just returned from a three-week trip touring Buddhist temples in Laos and cruising the Mekong Delta in Vietnam. His 61-year-old daughter Lee lives year-round in the basement of her friend's Cape Cod cottage, venturing into the winter cold to get to the bathroom.

Lew is making the most of his old age. Lee is paring back and lightening her load as she looks ahead to her later years. Both worked all their lives, both saved what they could. Yet Lew, a son of the Great Depression and former company man, and Lee, a baby boomer who has pursued careers as an entrepreneur and a mid-level manager, are winding up in two very different economic strata.

"Timing is everything and my dad's timing with jobs, real estate and retirement benefits was better," said Lee.

While plenty of baby boomers, born from 1946 to 1964, have become affluent and many elderly around the U.S. face financial hardship, the wealth disparity of this father and daughter is emblematic of a broad shift occurring around the country. A rising tide of graying baby boomers is less secure financially and has a lower standard of living than their aged parents.

The median net worth for U.S. households headed by boomers aged 55 to 64 was almost 8 percent lower, at $143,964, than those 75 and older in 2011, according to Census Bureau data. Boomers lost more than other groups in the stock market and housing bust of 2008, and many also lost their jobs in the aftermath at a critical point in their productive years.

Worse off

That's left many ill prepared to provide for themselves as they approach old age, even as they are likely to live longer than their parents. For the first time in generations, the next wave of retirees will probably be worse off than the current elderly. More than half of those aged 50 to 64 think their standard of living in retirement will be somewhat or much worse than their parents, according to a 2011 survey by the AARP Public Policy Institute.

"Baby boomers are the first generation without the safety net of pensions and other benefits their parents have," said Alicia Munnell, director of the Center for Retirement Research at Boston College. "They're facing a much more challenging old age."

Lee Manchester knows she'll have a more austere old age than her father's. She made a choice early on, seeking to become an entrepreneur rather than work for a large company with benefits, as he did. After running a real estate business with her Cape Cod friend, Brita Tate, she started a commercial construction company when she was 34. Instead of saving for retirement, she borrowed and spent money on her venture.

Work ethic

To be sure, many parents have had more financial success than their children and Lee conceded that she's made a mistake or two along the way. Still, like many of her generation, Lee pursued a steady path, forging ahead in the wake of economic headwinds and career setbacks.

Lee said she harbors no resentment for her dad, who she credits with instilling her with a strong work ethic. As teenagers, she, her older sister and her younger brother, all in their 60s now, each paid 5 cents a mile whenever they used their dad's car. After graduating from University of Wisconsin, she married her high school boyfriend and followed him to Arizona, where he was training to be an Air Force pilot. She worked as a substitute teacher until the couple returned to Hartford, Conn., where they'd both grown up.

"I was never allowed to dream," she said. "My parents and then my husband expected me to work, and I couldn't really think about what I most wanted to do."

New company

Lee got the courage to stretch when she started a commercial construction company in 1986 with $150,000 from her divorce settlement. She hired a dozen employees and succeeded in landing contracts supplying steel parts for buildings, until the construction industry slumped in 1989.

"When the company went down, my father was likely shaking his head and thinking, 'Holy mackerel, what is she doing?'" she said.

Her father, in fact, has never blamed Lee. "She did her best and tried to make it work," he said.

Bouncing back, Lee became a sales manager in the airport parking business. Still, she didn't start saving for retirement until she was in her late 40s, when her employer established a 401k account.

Median savings

Lee is hardly the only baby boomer who didn't save enough, worked for companies without 401k accounts or lost significant amounts in the financial crisis. Today, her retirement savings of $120,000 are right at the median 401k balance for households headed by baby boomers, according to 2011 data from the Center for Retirement Research at Boston College.

That will provide just $4,800 a year to boomers when they turn 65, assuming they take out 4 percent annually, the limit financial planners say should be withdrawn to assure retirees don't run out of money in their lifetimes.

Her father said both he and Lee's mother worried about her finances and helped her raise her sons. They baby-sat regularly, and Lew took his grandsons camping. And they reduced the rent on the apartment Lee rented from them so she could send her younger son, who was having trouble in junior high, to a boarding school in ninth and 10th grades.

"It was our privilege to help raise our grandsons, and we thought of a way to help with their education that wasn't just writing a check to the school," her father said.

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