Posted on 08/16/2010 7:18:41 AM PDT by Publius804
America's baby boomers—those born between 1946 and 1964—face 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 decade—and 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 ...
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.
John Galt.
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.
http://www.washingtonpost.com/wp-srv/special/politics/budget-2010/
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.
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