only thing i own on is my car payment and that's just 20 more months.
Posted on 08/16/2008 12:51:32 PM PDT by vietvet67
You got that right. Many Boomers will go through in a few short years the savings their parents took a lifetime to build.
Not only can I not think of a way for these people to be encouraged to save their inheritances, but there will be entire industries devoted toward parting them from their newly inherited money.
“You’ve spent a LIFETIME toiling on the edge. Now you’ve inherited a bit of breathing room. Your parents worked hard to give you the best, and now you can have it! You DESERVE it!” Yada, yada.
And the government will pile on because it will temporarily grow GDP and reduce unemployment.
Yep, there will be a big boom and a big bust. Will it take all of 10 years? No clue. But this windfall will be burned through in short order. People simply don’t appreciate what they didn’t work for. Some, the wise, will invest and pass this on to their children. But then, the wise already have found ways to provide for themselves and are saving for their own retirment.
Most will squander the money and it won’t take long. Think of those lottery winners who get 5 million or more in cash and it is just gone in years.
Now how many boomer are going to pass on 7 figure balances to their children? Few. Damn few.
I just read a post on FreeRepublic where an elderly couple lost their free-and-clear paid for home to foreclosure because their children refinanced to the tune of $450,000 and squandered every penny.
Project that over at least 50% of the boomers. That’s how I see it. PAR-TAY till the cows come home.
Speak of the devil. Check out post #60.
“She then blew a significant inheritance.”
What were we just saying?
Like they say, “stupid hurts”. Although the government is taking a lot of the “hurts” out of “stupid” and is putting it on you and me. That’s what chaps my hide.
Honest guys finish last. Well, at least here in this life.
Don Surber (Feb 2007),
The myth of a low-savings rate
http://blogs.dailymail.com/donsurber/2007/02/02/the-myth-of-a-low-savings-rate/
Martin Crutsinger of the AP scored big on the Bush administration with a deceptive story about the nation’s savings rate.
After-tax savings rate, that is.
The rate that does not include the $3.2 trillion Americans have socked away in 401 Ks and other pre-tax savings plans.
But Crutsinger’s report led to the headlines sought, like this one in the Columbus Dispatch: “Savings rate lowest since Depression.”
It is the Depression all over again to the liberals who run big-city newspapers.
Except for the part where 136 million people have jobs.
And except for the part where exports are at an all-time high.
And except for the part where we have $3.2 trillion socked away in 401 K-style plans.
In fact, it was just last Saturday that Damon Darlin of the New York Times told us we have too much money socked away for retirement, what with the average 401 K now at $62,000 (a figure that is useless without knowing what the average age of the participants is; $62,000 at age 30 is a lot — but it is too little at age 60). Wrote Darlin:
Nevertheless, the loose confederation of well-regarded economists, who have not been working in concert, say their research points to the startling conclusion that many Americans are saving too much, not too little. Indeed, their studies of the savings and spending habits of the generation born between 1931 and 1941 revealed that at least 80 percent had accumulated more than enough wealth for retirement. While they have not studied the baby boom generation as closely, they believe that the greater wealth of that generation should also leave those retirees secure.
A study last October by another group of economists, including two working for the Federal Reserve Board, found 88 percent of retirees age 51 and older had adequate wealth.
“Even the most casual reading of the popular press will have you convinced that Americans are heading like lemmings over a cliff,” said John Karl Scholz, an economics professor at the University of Wisconsin at Madison. “Going into this, I had no idea that we’d find any results anything like this.”
But AP’s Crutsinger wrote:
But analysts cautioned that this behavior was risky at a time when 78 million Americans are on the verge of retirement.
“Americans seem to have the feeling that it is wimpish to save,” said David Wyss, chief economist at Standard & Poor’s in New York. “The idea is to put away money for old age and we are just not doing that.”
So Americans have too much in their 401 Ks, but not enough in their post-tax personal savings accounts.
The media have spoken.
Oh, and it is all George Bush’s fault.
By the way, if you notice the charts, pre-tax saving peaked at 11% in 1977. A year later, 401 Ks came into being. It has been downhill from there.
Americans are saving for their retirement.
And guess what? When baby boomers retire, there will be a tax boom as we pay taxes on the money we socked away and earned in 401 Ks.
I have a friend who has become a health nut... just to give him time to spend all of his inheritance. He wants to live to a ripe old age in luxury and doesn’t want to go until every last penny is spent (he has no children to bequeath the money to). I kid you not.
only thing i own on is my car payment and that's just 20 more months.
You make good points about savings rates. What is your opinion about the rest of the article?
Maybe not. If we enter a period of hyper-inflation, those who are debt free, but on fixed incomes will also suffer.
Sure, but the housing crisis - or “credit crunch” as it were is a big component of the mess. The standard 20 per cent down, 30 year fixed interest rate mortgage is a relatively recent thing, post WWII if not mistaken.
Prior to that, it’s my understanding that it was pretty much standard to have at least a 50 per cent downpayment on a home, and the note was renegotiated every 6 months to a year - and callable at any time. (This of course made for good movie westerns where the widow Jenny was going to lose the farm, etc. If you wanted somebodys’ land, you bought the note from the bank, and then told Jenny to pay up, or get out, etc.)
What I don’t understand is why lending standards were droppped so significantly. It wasn’t just the 3 per cent downpayment requirements that were disastrous, it wasn’t just the overinflated values “sold” to persons who had terrible credit, no history of paying for anything, no verifiable employment or income, etc. etc. Then these loans were bundled together, slapped with a AAA triple-A rating and sold far and wide. Can’t make this stuff up.
Not to pick a number, but a 20 per cent downpayment allows for a significant downturn in housing values without blowing a hole in the mortgage. Really, I can’t understand why any lending institution would loan money without making a prospective homeowner demonstrate competency with amortization tables - have you ever talked to people who buy cars based only on the monthly payment? They haven’t a CLUE what they are doing, and the car dealers just laugh. Apparently the used car salesmen in recent years switched over to mortgage banking?
If I lose my job and need money to survive, I tap ALL my money, not just my savings.
Those inheritances will be squandered on vacations to the French Riviera and vacation homes upstate so fast, you will miss it if you blink.
I wish I had you as a college professor. Throw a bunch of statistics into a paper, predict gloom, and walk out with an A+.
Thanks for responding.
There is definitely an incentive for aging parents to transfer their entire estate to TRUSTWORTHY children, so as to be able to get all of the govenrnment benefits that come from being poor. If you transfer your money and house to your kids, there is nothing for them to come after when you die. If you don’t, that house gets sucked into the great Medicare void you ran up while in the nursing home.
Definitely some truth to that.
The bean counters are just counting savings accounts for that figure. I don't believe they count after tax investments as savings either.
Boomer inheritances? What Boomer inheritances? The Boomers’ parents, many with greedy trophy wives hanging off their wrinkled arms, have been riding around for decades in swanky RV’s proudly sporting bumper stickers “We’re spending our children’s inheritance!” They are the original ME generation.
I find responses like yours so deeply frustrating. You obviously disagree with the article, yet you refuse to actually rebut a single point.
It leaves me with the impression you either don’t know the facts, or you are in denial about them. I have no way of knowing that is true. You may in fact have all the facts at your fingertips and you know this article is complete BS.
But this exhaustive article speaks to many issues and you don’t refute a single one as an example to support your view that the article is false.
I wish people would at least discuss why the article is wrong and not just a worthless declarative sound bite with nothing to back it up.
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