Monday, March 24, 2014

BROKE BOOMERS

 http://www.backpocketcoo.com/blog/wp-content/uploads/Baby-Boomers.jpg

At various and sundry places, I have read about the sorry financial state of a significant percentage of baby boomers - folks born between 1946 and 1964 and thus including yours truly.  Rather than being prepared for a stable and long retirement, the cartoon below sums it up for millions:

http://dalys.com/blog/nonboomers.jpg
So, here are some of the data from a recent article in the AARP Magazine and other sources:

*  Boomers have set aside approximately $21.7 trillion - problem is, it's not nearly enough considering that 1 in 5 boomers are already retired and many will live another 20+ years

*  Nearly 50% of boomers are not on track to be able to afford the basic expenses in retirement

*  Contrary to claims by some investment firms, research shows that the typical retirement account for a worker nearing retirement is only $42,000.  Worse - 55% of current workers do not have any employment-based savings at all

*  For workers between 55 and 64:
                  60% have less than $100,000 'socked away' for retirement
                  75% have less than $30,000 saved for retirement
                  46% have less than 10,000 saved

*  The typical Social Security check is now $1,230 - which leaves most boomers about half a million dollars short to fund their retirements at a level of around 70% of their current lifestyles

*  Many [most?] baby boomers will be less well off then their parents.  The median net worth for U.S. households headed by people aged 55 to 64 was almost 8 percent lower, at $143,964, than those 75 and older in 2011.  Some claim that 'boomers have all of the money' but tend to forget that wealth is relative, and a fairly small percentage of boomers control a very large percentage of the wealth

*  A bit of good news - About 80% of boomers own their homes.  Of the 14.5 million 65+ households that own their home outright, the typical homeowner reports having an average of roughly $150,000 in home equity. The 6.5 million 65+ homeowners with a mortgage reported higher home values than owners without a mortgage, but their mortgage debt reduces the reported equity to an average of around $93,000.
                
And in typical boomer fashion, 70% believe that they are doing a good job regarding retirement saving!!!  When I compare our retirement finances with those above, I feel pretty good.  Then I have to wonder, why are we [and most of our friends and relatives] better off than most folks - some important components: we generally did not purchase everything that came to mind, we did not splurge on extravagant vacations and other money sinkholes, we have been fortunate in the real estate market, we have generous parents and decent employment retirement plans, and we actually believe in savings!

17 comments:

Food-Seeking Worm said...

I like the Amish Retirement Plan. If retirement disappeared, Americans would have to work until the day that they died, just as life was 79 years ago. Then, the only people with an ad hoc retirement plan were farmers. If they had many children (hopefully boys) and were able to raise them to adulthood, the children could eventually take over the family farm to continue to provide food for the family. Children were, in essence, their parents' retirement plan.

RealityCheck said...

Thanks, Chancellor Otto Von Bismarck of Germany, for saying in 1883 that you would "pay a pension to any nonworking German over the age of 65." Hardly anyone lived to that age back then, but that is beside the point. The idea of retirement wasn't adopted in the United States until 1935 when President Franklin D. Roosevelt proposed the Social Security Act of 1935, which made workers give the federal government a part of their paychecks each month towards Social Security, which would then be redistributed to them at retirement. It was intended as a supplement only, not an amount that would pay for a comfortable retirement.
Retirement isn't a universal, basic human right that is afforded to everyone - it is a privilege. If you haven’t saved enough, you simply can't retire, and you will have to work until the day you die. Americans have to learn to save more, borrow less, and consume less.

DES said...

FSM [not the Flying Spaghetti Monster] and RC - totally agree. Nearly all US folks seem to think that Social Security is a retirement program/guarantee whereas it never was nor never will be such a thing. I do know some very careful people who make it by just fine on their SS benefits. As a bit of an aside, my dad worked so long and paid in at the top rate for so many years, that he and my mother are surely among the highest earning SS folks in the country!

I think that a lot of work should be restructured such that older folks can continue, but with curtailed activities and responsibilities [we are indeed getting older!]. I once suggested to the science poo-bahs in DC that the NIH and NSF should consider end-of-career 'post-docs' just as they do beginning-of-career post docs - think of the expertise that could be taps with the old farts helping out the young folks - and generally the old farts would work for the same salary as the young scientists. I got lots of nods, good idea, etc., but no serious discussion.

Want to Puke? said...

The Federal government needs to get involved because 401(k) plans and IRA’s are unfair to poor people. The Obama administration needs to set up a government-sponsored program administered by the PBGC (Pension Benefit Guarantee Corporation). Even private annuities are problematic. The Feds should confiscate all private pension plans and nationalize the private retirement system and require all Americans to buy government annuities instead of saving or investing on their own. The Government could then take these trillions of dollars and redistribute it through this new national retirement system. That, indeed, would be fair and just for all.

hossierdaddy said...

Want To Puke? smells like a Poe to me. :-)

Want to Puke? said...

I don't believe in what I said previously and really don't want you to literally get sick, but there are many on the left who are advocates of a Fed takeover of the private pension system. For what reason? I will in a million years never understand. On the surface, they come up with tooth fairy BS under the guise of fairness and social justice, but the left actually hates people with a passion. If the left actually had any compassion for people, they would never have saddled us with the unworkable abomination known as Obamacare. Millions have lost their insurance coverage and their doctors and will end up paying through the nose for plans they can't afford, and with sky high deductibles. OR ELSE. Knowing now that the plan is a total failure, does the left care? Will they repeal the law? No. Why? Because they could give a crap less about you. And, as you all know, the leftist leaders in Congress exempted themselves from Obamacare, because they don't want to suffer and be burdened by it. For those of you who are, they simply don't care and remain indifferent to your plight. That is not compassion for the people of the country, it is hate.

Want to Puke? said...

Many of you may think it is just indifference and does not rise to the level of hate. At present, mostly the self-employed are affected and forced to fend for themselves on the Obamacare market of expensive, crap policies. Soon that number will skyrocket. Within a couple years, the vast number of waivers and exemptions will have expired and a large percentage of employers will have cancelled their employee insurance plans. Then come back and tell me that it is not hate for the population to cause untold millions to suffer economically with expensive plans with high deductibles, and suffer health-wise due to lack of doctor and hospital choices, not to mention the millions who will go without health insurance altogether.

DES said...

I am flattered that Sean Hannity takes the time to comment on this humble blog :-) However, don't blame it on the politicians, blame it on the dim, apathetic, and lazy electorate: " A democracy will continue to exist up until the voters discover that they can vote themselves generous gifts from the public treasury."

Bizzy Brain said...

You read my mind, DES. One has to ask, "What came first, the chicken or the egg." (Since I believe in creation, the chicken came first, but I digress.) The stage had to be set by apathetic, low information voters who are clueless regarding the history of civilizations and why they rise and fall, what does and doesn't work in government, the priceless value of liberty and our political and economic freedoms, the problem of evil and human nature, and the existence of terribly negative and destructive forces that want to rip the good and positive of our Western civilization (held together by the USA, I might add) to shreds and replace it with secular third world tyrannies, which will eventually lead to WWIII, or Armageddon, as the case may be. It was known before 2008 that Obama was a white hating, capitalist hating, America hating, Jew hating Marxist thug. None of that seemed to matter to the electorate, who thought a tool of the devil would work out just fine as our national and world leader. It is no different than putting a gun to the head of the country as what holds us together as a strong and unique people is being rapidly dismantled by the progressives.
(BTW, I think Rush and Mark Levin read your blog also. Lol! Pass the pie, please.)

DES said...

Back to Boomers for a moment - I just learned that I am a member of a group that I did not know existed - GRAMPIES!! Growing Number of Retired Active Monied People in Excellent Condition. :-) A younger Boulderite was complaining that our group does not deserve senior discounts to places like ski areas. Har!

DES said...

Duh- excellent Shape [Condition would not work ;-]

Mort Sunday said...

Congratulations on staying in shape! Could use a little of that myself. Good comment about senior discounts. Many seniors have more money than they ever had in their lives and not much in need of discounts.

DES said...

Mort - agreed about seniors. One thing about the seniors and the economy is that many of us boomers have stopped buying stuff. We have virtually everything that we need and often don't have a lot of wants - many of us would prefer to spend our money on the kids and grandkids.

listofx.com said...

Well, there always places like Costa Rica, Mexico, Thailand, where a $1300 Social Security check can go a long way.
And I don't think that the government should nationalize private pensions or privatize Social Security. The system is fine, the problem is that people often don't start thinking about retirement until it's too late.

DES said...

You are exactly right X. {for those not familiar, X = 10 and his lists are both hilarious and insightful]. In addition to some of the foreign countries mentioned, I would add places like central Michigan and similar environs in the US - we have some relatives who retired there and it is possible to live quite comfortably on modest retirement income.

Bizzy Brain said...

My retirement goals are to summer in Brownsburg, IN and to winter in Brownsburg, IN.

rio said...

Bizzy - delayed response - why Brownsburg? Is that where you live right now? :-)