People have accused the baby boomers of being whiners almost since we were born. But just wait until we get to retirement age and discover that we don’t have nearly enough money to take care of our “golden years.” That’s going to be the ultimate generational bummer.
I’ve been gathering some data about what I’ll call, with the usual boomer understatement, the “retirement crisis.” My mentors have been Eugene Ludwig, the head of the consulting firm Promontory Financial Group, and his colleague Michael Foot. The numbers show a genuinely frightening gap between what people have saved for retirement and what they will need. And many of these studies don’t take into account last year’s stock market crash, which will make the problem worse.
Let’s start with the basic fact that only about half of Americans have any employer-sponsored retirement plan at all. The other folks will have to depend on Social Security. For a typical boomer worker, that would mean a monthly benefit of about $2,400 at a retirement age of 66 in 2020. On that, you won’t be able to afford many Starbucks lattes.
While I guess we are among some of the more fortunate ones of our generation, not being a burden in old age is certainly something this sixtysomething worries about, and for which I am chided by my wife. The economy in the last couple of years has not helped our financial planning one little bit, but at least we have been able to do enough to be able to keep the wolf from the door. I am increasingly of the mind that retirement is less and less of an option for society to bear for any of us who are older — and I know that is probably not a popular idea. Fortunately, it doesn’t look as if I need to retire in the foreseeable future.
Yes, baby boomers fail to save and invest sufficiently and then make poor investment choices. One big problem is that the government has a much worse track record on all counts!
I’m quite confident that the Boomers, voting in large numbers, will not fail to elect representatives that will plunder any and all available wealth, using the power of the State to cover their profligacy. We have in office such a Mussolini-esque figure right now, in fact.
OK, before we dump on boomers too much, let’s look at a little history of how we go where we are. First we come out of high school and college and we are drafted and sent to fight in a war (Vietnam) that we did not start and which we are not allowed to win – who did start it and who are making the decisions during the war – oh yeah, the Greatest Generation. Then after not being allowed to win the war, we come home to more spite from our own citizens. So we tuck our heads under the vilification we receive and we finally start our lives and begin our families and careers. We are met almost immediately with a President who is forced to resign, and then in a kneejerk response a President (Carter) who has not a clue about anything, domestic or foreign, and inflation and interest rates skyrocket. In addition, tax rates have skyrocketed. But the government allows deductions for any kind of interest, so credit card use comes into vogue, since we can deduct the interest. Then the government takes that interest deduction away, but we still have high balance credit cards to pay off. While we are trying to pay those balances off, all our other tax deductions are basically taken away, except for mortgate interest and charitable deductions (the floors set for anything else is too high for use by the average tax payer). So when we buy our second house, we buy the biggest house we can get, since we can deduct that interest. As our children grow up and go off to college, tax rates are still high and are still taking enormous amounts of our income – our parents paid roughly 5-7% of their income; we have always paid 15-35% or more – and that is just Federal income taxes. Businesses begin to cut back on pension plans and small IRAs begin to be allowed by the government. Then in the mid-90s the Republican Congress allows us to begin stashing real money in 401k plans, with the amount growing every year, and even giving some special rights to those over 55 to try to help them catch up. So we stash everything we can in our own retirement plans, and we have our nest eggs in those and in our houses. Our retirements are based on those two sources, plus social security, the three tiered plan. So what happens: stock market dives and takes 30-50% of value of 401k; home prices tank; and now our government is probably going to set up means testing for social security. And while we have been going through these economic histories, we’ve had children who have not been able to find jobs or who have gotten involved with drugs or alcohol, who have returned to live with us for extended periods of time, some indefinitely. And we’ve had our parents, who didn’t save enough and became totally dependent on social security who have come to live with us, many of whom are now in assisted living or nursing homes, much of it being paid for by us boomers or as we are now called “the sandwich generation.”
The end result is that we shall not retire at 66 as we wanted and had planned, but we shall continue to work until we are dead or cannot work any longer. And jobs for younger persons will not be available – or if they are made available by laying us off, there may be a plethora of age discrimation lawsuits on the horizon. Most of us have tried to do the right thing all along – we’ve worked hard, saved when we could, educated our children, taken care of our parents. But we have paid an enormous amount of our income to taxes over our lifetimes. So we may not have enough. So we shall keep working. But I don’t think you’ll hear many of us asking for bailouts … not the working boomers.
A simple question: where did all the money go that would have been spent on children that the Boomers never had? Statmann
#5, those boomers retired 7 years ago and moved to Costa Rica.