Boomer Bummer: Retirement May Get Ugly for Generation

The Wall Street Journal ^ | Wednesday, July 9, 2003 | JONATHAN CLEMENTS

[TroutStalker]

I don't have much tolerance for doom-and-gloom pundits. Still, as I think about the rapidly approaching retirement of the baby boomers, those born between 1946 and 1964, one thought comes to mind: It's going to get ugly.

Don't worry, I am not about to bore you with some wild-eyed financial forecast. Rather, my pessimism is rooted in three entirely predictable developments.

[Wonder Warthog]

"For many baby boomers, the solution will be to delay retirement. That will give them more time to save and to earn investment returns."

SURREEEE it will, with industry booting highly experienced 50 year olds (who make a bigger salary), for "not-dry-behind-the-ears" new-hires (who they can pay peanuts), where, exactly, are these 65 year olds supposed to work??

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[ruppertdog]

McDonalds

[RippleFire]

"Would you like fries with that?"

[WilliamWallace1999]

Walmart is always hiring new greeters.

Boomers deserve most of what they get. I sit on the cusp (born 1961) and have little regard for boomers or the X'ers. The Boomers spend money like drunken sailors and will expect the younger generation to pay the tab. X'ers have no work ethic and bop around from job to job.

Simple solution for both. Do without a few of the toys of technology and SAVE YOUR MONEY. I have put away almost 20% per year of my earnings since I hit the workforce. Max out your company savings and then sock the rest away in conservative growth investments. My only worry about the future is they will tax the crap out of those of us who sacrificed when we were young and make big RV's illegal. That's why I plan to spend down the post tax savings first and spread out the 401K for later.

[Wonder Warthog]

"Do without a few of the toys of technology and SAVE YOUR MONEY. I have put away almost 20% per year of my earnings since I hit the workforce. Max out your company savings and then sock the rest away in conservative growth investments. My only worry about the future is they will tax the crap out of those of us who sacrificed when we were young and make big RV's illegal."

Well, I'm a classic boomer (born 1947), but I guess I don't fit the mold. I could retire today with a pretty good revenue stream from investments alone (that is POST the 9/11 market bust). My wife and I have lived pretty conservatively and saved reasonably well. Like you, I suspect the government will steal the investment income of us "ants" to pay to the "grasshoppers" who didn't.

[Wolfie]

Call me crazy (everbody else does), but I think that 401Ks and IRAs are just the government's way of getting us to squirrel away money so that it will be there for them to loot when its needed.

[sox_the_cat]

I can see that, but there are a lot of people who converted to Roth IRA's a while back and two bad things can happen to them. We can follow the current trend and regular IRA's and 401k's may become tax free or low tax, or Roth IRA's could become a nice place to start levying taxes.

[taxcontrol]

In our current economy, the government has essentially two throttles for the economy - Interest rate and tax rate.

Interest rate is almost spent. Lowering taxes without lowering spending creates debt that in the long run, cancels out the positive effects of lowered taxes.

It is way PAST time congress decreases spending and taxes. That is what will create the next real economic boom.

[lafroste]

Boomers deserve most of what they get. I sit on the cusp (born 1961)

I call that phenomenon "10 years after the wave". Like you, I am technically a baby boomer, but came so late that I missed the cultural aspects almost completely. It has not been easy to navigate the wake that those maniacs have left behind as I enter every phase of life right after they have gotten there, trashed it, and moved on. Some examples:

Being ridiculed because I couldn't Hula-Hoop (too young)
Having my romantic idealism destroyed because it coincided with sport-f&^king in the culture,
I finally reach the point that the above activity might be fun just in time to hit "the new celebacy"
Everyone suddenly deciding they wanted material things after all, power lunches, yuppies, ad nauseum when I still had three years of college to finish, so that when I entered the work force, my highly paid bosses were all 6 - 10 years older than me and still real a#$holes,
Older people coming to the realization, en masse, that they really are going to die launches a seething wave of safety laws whose net effect is to deprive me of a (admittedly immature) sense of personal freedom that I expected because they enjoyed it first.

The game has become trying to figure out where those maniacs are going next and how to turn it to my advantage. Unfortunately, they seem to be becoming more staid, less risk averse, and are clogging upper management positions making advancement more difficult. By the time they do retire out of the way, I will be "too old", and will be passed over for "younger blood". All is not bleak however, one can always rely on their overriding selfishness and fadishness. Therefore the obvious approach is to become my own center of gravity, help myself to their investment dollars, and not worry about it - the exact approach any successful person should take.

And at least I will probably be able to find some nursing home openings if and when it comes to that.

[Jack Black]

A great book on this is "The 401K hoax". It's an amazing book. It is not a conspiracy theory type of book, the authors are writers for Business Week. Their simple analysis says: the retired have to live off of the excess cash that society throws off in three ways: dividends & appreciation of stocks, pension payments and bonds. They then analyize the total amount likely to be thrown off by these mechanisms in the next generation. Conclusion: no where near enough.

They then go on to explain the actual mechanics. Companies like Xerox, GM used to put FAR more of their profits into paying for pensions than they now put into 401K matches.

Another good book on this topic is "What if Boomers Don't have enough to Retire".

This is going to be THE political issue of the next 10 years.