Skip to comments.Another Threat to Economy: Boomers Cutting Back
Posted on 08/16/2010 7:18:41 AM PDT by Publius804
America's baby boomersthose born between 1946 and 1964face a problem that could weigh on the economy for years to come: The longer it takes for the economy to recover, the less money they'll have to spend in retirement.
Policy makers have long worried that Americans aren't saving enough for old age. And lately, current and prospective retirees have been hit on many fronts at once: They have less money, they earn less on what they have, their houses aren't rising in value and the prospect of working longer to make up the shortfall has dimmed significantly in a lousy job market.
"We will have to learn to make do with a lot less in material things," says Gary Snodgrass, a 63-year-old health-care consultant in Placerville, Calif. The financial crisis, he says, slashed his retirement savings 40% and the value of his house by about half.
Banks, home buyers and bond issuers are all benefiting as the U.S. Federal Reserve holds short-term interest rates near zero to support a recovery. But for many of the 36 million Americans who will turn 65 over the next decadeand even for the 45 million who have another decade to go the resulting low bond yields, combined with a volatile stock market, are making a dire retirement picture look even worse.
Low yields present retirees with a difficult choice: Accept the lower income offered by safer bonds, or take the risk of staying in the stock market. Either way, their predicament could put a long-term damper on the consumer spending that typically drives U.S. growth.
(Excerpt) Read more at online.wsj.com ...
They are not cutting back on health care premiums and health care costs.
Already accomplished as part of going Galt in a virtual manner.
The biggest group of children from one generation, the unappreciated cash cow is now aging.
Guess the Government can't kick the can down the road any longer. The old gray Boomer Generation has been used up and there is nothing left for them but Obamacare!
Wait till the second boomer stock market panic takes place. This month or next....
The war against totalitarians should be waged on all levels including philosophical, political, social and financial before you have to get to physical.
Defund totalitarians and their collectives.
Very interesting. I think a lot of Baby Boomers are going to find that the whole promise of “retirement” was nothing more than a con job. The idea that someone could retire at 60-65 and then go on living for another 25-30 years without doing anything productive was never sustainable.
>> They are not cutting back on health care premiums and health care costs.
Ain’t THAT the truth. :-(
Hell yes. With my job suddenly at risk with the regime wanting to disestablish JFCOM, damned right THIS baby-boomer is cutting back.
Since I have no political power myself, all I can do is pray that God gives them what they deserve. God knows who did it. God can bring them to their knees.
Of course we're supposed to forgive. Yeah, I can do that, but I also ask God to dispense his justice and look after those who call on his name for help and mercy.
If we can't make it paycheck to paycheck then, noooo we can't save for old age.
And lately, current and prospective retirees have been hit on many fronts at once: They have less money,
they earn less on what they have
their houses aren't rising in value
False. Housing prices are still skyrocketing in my neck of the woods so property taxes are also skyrocketing causing even more financial problems.
and the prospect of working longer to make up the shortfall has dimmed significantly in a lousy job market.
True. On that progressing unemployment map, this county is now at the dark purple color. There are a few jobs but they are part time, minimum wage, and no benefits.
Except the soup lines won't be as orderly as last time around
Yeah there aren’t enough of us dead yet. Zip that wallet.
A threat to a totalitarian economy is a gain for free people.
No wonder they wanted death panels in “healthcare”...
I agree. And 20+ years of retirement, paid for by "somebody," is only a small part. The entire social-welfare-state construct - handouts for the idle, medical care, schooling - is going to prove to be a failed experiment within the next 50 years.
>> The idea that someone could retire at 60-65 and then go on living for another 25-30 years without doing anything productive was never sustainable.
Right you are.
I feel blessed that I like my work. I plan to work until I can’t anymore.
I advise that everyone spends less than 50% of their take home pay. Save the rest. First it starves our evil government of tax revenue, as an added bonus, you will find that all of the crap that you used to spend money on didn’t make you happy at all.
The Fed is basically stealing from savers and rewarding borrowers.
Already accomplished on my part. When TARP passed, I started going Galt. When Stimulus followed, I went more extreme. I’ve cut way back on my production and even farther back on my spending. As for investment, I’m completely out of the stock market and will remain out for as long as the usurper holds power.
I understood your point, poobear, and it’s a point that deserves to be made. We Boomers didn’t create Social Security, but we sure got the privilege of paying for it (opting out, of course, was NOT an option). The greatest generation who built the Great Society got in early, a smart, albeit immoral choice for anyone in a Ponzi scheme. They got far more out then they paid in—a great deal if one has no moral qualms against stealing from their fellow citizens.
Wihtout doing anything productive and living independently.
I think many older folks are going to be wishing soon that they had more children, had their children earlier, or worked harder at making the children they did have grow to be more responsible and productive.
“Very interesting. I think a lot of Baby Boomers are going to find that the whole promise of retirement was nothing more than a con job. The idea that someone could retire at 60-65 and then go on living for another 25-30 years without doing anything productive was never sustainable.”
Your assertion is false. With good policies, the baby boomer retirements could have been reasonably secure. However, we have not had reasonable policies espcially since 2009. Most of the money contributed to payroll taxes should have been saved, not spent. If the contributions had been spent and reasonable constraints would have been placed on government, retirements would be reasonable secure.
The most interesting part of this situation is the utter disregard that baby boomers have had for their own retirement. We have seen the problems of entitlement spending festering for decades. Baby boomers have allowed the rats to demoagouge the issue. The greatest generation (as a whole) has been a determined voting block against reform but baby boomers could have easily voted against fiscal irresponsibility. The greatest generation has skimmed good returns from the entitlement programs without any regard to the sustainability of the programs. The political class has skewed the debate over entitlements that liabilities (trust fuund) are somehow considered assets. I see little hope in any meaningful reform. Privatization is the only answer but it has been eliminated from consideration by liars, thieves, and demagouges.
Actually, for the great majority in the nation, this is true. And I am one example. My home's value dropped another 11 percent in the past year...after dropping more than 40 percent in the previous year and a half. This is a huge factor in wealth destruction across the nation, which is a problem almost as acute as unemployment.
Yes, the responsible allocation of trust fund payments would have helped the situation. But the simple truth is that no human society in history has ever been able to function well with large numbers of its members living for extended periods of time without working productively. Heck, the whole concept of "retirement" is nothing more than a construct of the modern welfare state.
If you were to go back through human history and had access to the kind of statistical data needed to make these comparisons, I bet you'd find that the Western "super-states" of the 20th century were the first societies ever to see their average life expectancy exceed the productive working age of their populations.
With good policies.
Where the tax money comes from and where the tax money goes.
I know exactly what you mean. I remember when the elderly were one of the most loyal voting blocks for Democrats. Like I wrote, sure is nice for them. It’s great to be on the front end of a Ponzi scheme. As a relatively young Boomer, I’ll likely pay for it for my entire life. They’ll either have to inflate the value away or raise retirement age ahead of me. Decades ago, I remember thinking, “If Social Security REALLY is such a great deal, why won’t they let me opt out?” The answer, of course, is obvious.
BTW, I’m not a rich or young man, but I’d still probably opt out if they’d let me stop contributing. I might have another decade or two left in me, and I’d rather keep it and have it as an inheritance, sort of like a dollar in hand is better than two guaranteed by Uncle Sam.
Chances are if your employer had the choice of you both opting out you’d also get a significant raise! Double whammy if you’re a saver or an investor over the next 10 to 20 years. A major significance for the self-employed.
“Yes, the responsible allocation of trust fund payments would have helped the situation. But the simple truth is that no human society in history has ever been able to function well with large numbers of its members living for extended periods of time without working productively. Heck, the whole concept of “retirement” is nothing more than a construct of the modern welfare state.”
You make a good point. Retirement security is very challenging. Fiscally responsible policies are a prerequisite but there is no assurance that responsible policies would have been sufficient. Fiscally responsible policies would have added trillions in private savings to fund retirements. I also think that savings (instead of government guarantees) would have modified behavior. Voters would have realized that their retirements are dependent on fiscally responsible behavior instead of voting themselves someone else’s income and assets. The system would be self correcting with individuals reacting to changes in their worth by working and producing more if necessary.
The situation is the opposite now. We have almost half of the population believing that the other half should fund their lifestyles both before and after retirement. We have many individuals who sincerely believe that government can guarantee their financial security. They believe that confiscatory taxation is the key to equality and fairness for all.
Except that due to "fractional reserve lending" you're enabling the central banks to print more money.
Even scarier is the perceived solution in DC....open the Southern Border!!!
“the same minds that created the problem are not capable of the solution”
Then explain why my home’s value rose 250% since 2004.
Explain why my home’s value rose 23% since last year.
Do you see a drop there? I don’t. We didn’t buy more than we could afford but the rapid increase in values is killing us.
“The idea that someone could retire at 60-65 and then go on living for another 25-30 years without doing anything productive was never sustainable.”
Well it’s not like anyone will hire the elderly so are we now for death panels or something? I’m being a little sarcastic there.
Reading some of the other comments though, maybe I need to look at my career, because I know for sure I would hate to still be dealing with M$ software problems when I’m 70+.
I’m still trying to figure out how bonds are “safer” if da gubment goes broke.
Unfortunately not all of us boomers pissed away our incomes on *stuff*. Some of us did without things like new cars every year or two, bigger houses than we could afford and every bell and whistle available. We paid for our kids college educations and lived within our means. Suddenly, much of the money we put into retirement savings has evaporated, and we are going to be expected to bail out those who lived like there was no tomorrow. THAT is what ticks me off.
We haven't had reasonable policies for thirty years. The housing bubble and all the other bubbles didn't start in 2009. This federal govt. has been gorging itself on the nation's wealth for decades and promising things it knew it couldn't deliver. Please, don't try to equate this with dems. The GOP has been part of the problem for decades.
Who said anything about investing in US Treasuries? Hell, even China is selling theirs! There are a lot of things you can invest in without going through Wall Street or Bond Brokers. Food and guns come to mind.
I think there is a problem in that people are living longer, and some can work longer, but I’ll tell you, we live in S. FL and I see LOTS Of elderly who likely could not work. While 65 is probably a little unreasonable (altho not for everyone, since some people really are elderly at 65) I can’t imagine lots of people being able to work until they died of old age. So, your mention of death panels is appropriate.
Multiply your plight by two, and you see mine.
Halving the population doesn’t bode well for boomers.
I’ve never figured out what there is to do when one retires.
“We haven’t had reasonable policies for thirty years. The housing bubble and all the other bubbles didn’t start in 2009. This federal govt. has been gorging itself on the nation’s wealth for decades and promising things it knew it couldn’t deliver. Please, don’t try to equate this with dems. The GOP has been part of the problem for decades.”
You are correct that we have long abandoned fiscal responsibility. Entitlement problems certainly did not start in 2009. However, conservatives have asked for change for decades. We finally had a somewhat conservative government in 2005. Bush asked for some modest changes and was totally rejected.
The problem that Republicans face is electability. There is no competition for free money. Government spending is considered a free good, almost limitless in ability to transfer wealth and buffer society from market fluctuations. We had a conservative Congress from 1995 to 2000 that had made some positive changes. Almost every postive policy has been undone since 2009. Democrats have exploded government spending, regulations, and promised new levels of taxation. If we could have elected a conservative president in 1996, different policies would have been enacted.
Ping list for the discussion of the politics and social (and sometimes nostalgic) aspects that directly effects Generation Reagan / Generation-X (Those born from 1965-1981) including all the spending previous generations are doing that Gen-X and Y will end up paying for.
Freep mail me to be added or dropped. See my home page for details and previous articles.
***The entire social-welfare-state construct - handouts for the idle, medical care, schooling - is going to prove to be a failed experiment within the next 50 years. ***
Darn right! The Welfare voters who voted for Obama are going to be shocked when there’s no money for their health care.
Just look at the articles from all across the nation, you can probably do a quick search on FR and find a few hundred of them from just the past couple of weeks. I'm not making it up.
You should be extremely thankful if your home increased in value by that much - you haven't lost a chunk of your life's savings like literally millions have across the nation. If my home gained 250 percent in value over the next 6 years, I'd be the happiest damned man on the planet.
We bought a modest house for 161,000 back in 2000, using the money from my parent’s home that I inherited and my DH’s house here in MI.
The lemon is now worth 120,000. Along with all the kids college funds and savings are pretty well wiped away.
We have dropped our Directv, killed our cellphones, planted a garden, picked and stored veggies and fruits and limped along in our ten year old cars. We homeschool so there isn’t much education expense. We can’t cut too much more to rebuild any retirement.
I have “Welcome to Walmart” or “Do you want fries with that?” in my future.