According to these articles, baby boomers aren’t just a little behind on their savings. They’re in deep trouble. Time says the average 55-65 has less than 120K to draw from. This article in InfoWars claims the numbers are even worse; A full quarter of them haven’t saved anything at all.
IW: *26 percent of all Americans in the 46 to 64-year-old age bracket have no personal savings whatsoever.
*
And Forbes numbers show the average 65 year-old with less than 25K in total savings.
Forbes: * Our national demographics, coupled with indisputable glaringly insufficient retirement savings and human physiology, suggest that a catastrophic outcome for at least a significant percentage of our elderly population is inevitable. With the average 401(k) balance for 65 year olds estimated at $25,000 by independent experts – $100,000 if you believe the retirement planning industry - the decades many elders will spend in forced or elected “retirement” will be grim. *
Even though their numbers vary a lot, this is scary stuff. And about 10,000 of them are reaching 65 every day (according to IW).
Lately, things have been pretty grim for the Millienials, but the boomers have had a good economy for most of their working lives, and have few excuses (collectively) for winding up destitute. In aggregate this seems to be a catastrophe of their own making, and I suspect the current workforce will have little sympathy for their plight.
So what is likely to happen to them? What do you think should be done?
I think a fair amount of people are expecting significant inheritances from those depression-era parents who saved everything. That’s not what you’d call a fail-safe plan, of course. But I can personally think of several people in their 60s who will or have inherited pretty significant estates from middle class parents.
There is something a little off about one generation getting to retire in Florida because their own mothers never threw away a piece of tin foil they could wash, or bought a box of baggies when the bread company just gives you a perfectly good plastic bag for free.
ETA: I also think that many people really do a great deal of their saving between 55-65. My parents are very frugal, and of course compound interest is magic, but the reality of kids and college and low-earning years meant that the bulk of their net worth (which is significant) developed after they were 50. Once the kids were through school and the house was paid off, they could start saving well over 50% of their combined income–and it was those last 15 working years that they had the most income. In their 30s and 40s it was really more about keeping out of debt, launching the kids, and building up the career. I suspect that’s not unusual.
What happens next is that the great unraveling starts.
Politicians have promised way too much, and it’s unsustainable. There will come a point when they can tax no more and borrow no more. Up to that point it will be no worries, its all under control, Our finances are good, we can tax more, yada, yada, yada. They will say, and promise, wherever it takes to get re-elected. Then one week the tipping point will be reached. It will literally be that quick. One week not a problem, the next week a huge problem. Then the unraveling of the great society starts, and it will not be pretty.
It’s generally hard to sympathize with someone who made some bad decisions and now is up the proverbial creek without the proverbial paddle. It is, however, understandable when someone gets hit with unforeseen circumstances - like being 60 and having your house flood, and then finding out that your flood insurance doesn’t apply for some technical reason. The article doesn’t really say what situation the boomers are in - did they make their own bed and now must lie in it, or are they playing the best hand they can with the cards they’ve been dealt?
This is a bit like the debate over unwed teenage mothers or drug addicts. Yes, they may have made some bad decisions that got them there (they may not have). Yes, as a society we might want to show that these really are bad decisions, and other people should stop making them. But punishment doesn’t unbirth a baby or turn an addict into a productive member of society.
I think a likely scenario is that many of them keep working into their 70s to afford their upkeep. Those that can’t will often move back in with their kids, if they have any. Those that can’t work and don’t have kids to move in with will end up in shoddy housing and eating shoddy meals off social security, living a sad life until they die earlier than they would have otherwise.
I think we are also seeing people expecting to work much longer, perhaps in a post-retirement career. We are living longer, staying healthier for much of it, much less of our work is physical, we stay in school longer, and we are marrying and having kids later.
A 55 year old with a couple of teenagers in the house and who spends their time mountain biking or teaching yoga may not be considering retirement for quite some time. It’s a very different mindset than if you’ve been working on an assembly line since 18, the kids have been out of the house for 15 years, and your body is wearing out.
The broke-ass Boomers need to shack up with their Millenial children/grandchildren who are trying to make a go at it from behind the register of Walmart and Starbucks. Have the younger generation help them pay off their mortgages while they, the Boomers, provide the luxuries that are unaffordable to those on minimum wage. Like a zip code associated with “good” public schools and relatively low crime. If broke-ass Boomers don’t want to give up the trappings of their lifestyles, then sharing them with those without seems like a fair compromise.
I worry about all the underemployed 20-somethings I see. They all educated…all did the “right” things, learned all the “right” skills. And then I go to work and I see slow-moving Boomers trying to bring 20th century skills to solve 21 century problems…while complaining about their “lazy” adult children they’re having to support at home. “It’s not fair!” certainly sounds whiny, but nonetheless, this really isn’t fair.
For at least 15 years, I’ve been expecting that there is a fire sale on boomer houses coming. Whether it’s to move into a smaller house, assisted living, an apartment, or in with the kids, those family (or bigger) houses are going to go, for something cheaper.
We’ve been slowly converting part of our house to an apartment for my parents (who did save, and are not broke, but need physical help). When we talk to our realtor and mortgage banker, they say that multi-generational homes are making a comeback.
Grandma is moving in, while holding a part-time job.
I’m in my 60s, and I have plenty of money to retire on, so I can look at this problem more dispassionately than some.
And it depends. Some people did make bad decisions, and bought cars and stuff they couldn’t afford. On the other hand some people got screwed by being laid off and having to go through their savings to live.
At least, thanks to Social Security, no one will starve. But this is a direct result of the move away from pensions to 401Ks and IRAs. Sure, if you save steadily and avoid stupid investment decisions and keep working defined contribution plans work. But not everyone does that, and then they don’t work - and the fans of “personal responsibility” ignore the consequences.
Is this any different from previous generations? I understand the meme that “depression-era people saved every penny”, but all that indicates to me is that “depression-era people” are likely the outlier and not the norm. Given that the concept of retirement is relatively new, I don’t know if there are any studies out there that have shown long-term trends regarding retirement savings and generations. Anybody have any data?
It’s a demographic bubble of sorts; right now, the boomers are the single biggest group out there, and the vast majority of them are in management and highly responsible staff positions due to age and experience.
Supposedly we’ll start seeing a massive change in the next 10 years or so as more and more of the baby boomers start retiring without having so many GenX-ers underneath to take those positions.
The problem as I see it though, is that there’ll be great demand for GenX and Y people, and a lot for the entry level people at that point, but Millenials will be screwed because as a group, they’ll be older AND under-experienced.
Put another way, why hire a 30-something entry level worker if you can hire a early 20s entry level worker?
(personally, I’m looking forward to it, being one of the GenX-ers who will be in great demand)
There was an article in the Retirement section of the Times last week about how a lot more people plan to work after 65 than actually do. It seems that half those writing columns about working until 90 are professors who probably wouldn’t work harder at work than at home - my friend who kept teaching until 75 certainly fits that description.
There are lots of good reasons not to work. First, make some room for the young ones. Second, if you want to do anything like travel, don’t wait until you are 80. Third. more time for the Dope.
We’ll see how this fantasy of working until you drop as a retirement plan works out. Not so well, I think.
That a majority of people in high level positions are older does not mean that a majority (let alone a vast majority) of older people are in high level positions. If we were, we wouldn’t be having this discussion.
Which, to my mind, is a good thing. The increased moved toward single-generation households has been a 50-year-long mistake, IMHO.
Multi-generational households provide - again IMHO - a more stable place for kids and adults. Baby sitters are no longer needed, adult wage earners will know they have stability for planning and so forth. Plus is promote large-family bonding.
I’ve certainly invited my mom to come live with me anytime she wants. Far better that than she ends up in a nursing home somewhere. With enough people in the home anything becomes fairly simple.
This matches my experience watching my parents’ generation. At 55, you think 55-65 is going to be like 45-55, but it’s not. Medical care is better, but aging still accelerates. Even people who feel pretty good at 60 often start to feel much older than they anticipated at 63-64.
Us baby boomers plan to do exactly what our parents did in reality: vote for the government to pay for everything for us so we can spend our days playing golf and complaining about the poor servce young people provide. If necessary the government can introduce still more new programs that funnel money from the young into our pockets. That is what SS did for the elderly of yesteryear, that’s what Medicare did when it was introduced. Us baby boomers have watched our parents selfishly vote every perk they can think of for themselves, leaving us with only a vague promise that we can screw over our children in the same way and somehow make it work.
The sad truth is we can’t expect to live like our parents have in retirement. There are going to be a lot of poor old people in future.