5/23/2012 3:23 PM ET|
Are baby boomers to blame?
Behind a lot of our current economic woes and hanging over the future is a simple problem: A huge generation that has to keep working because it hasn't saved enough for retirement
You don't have to be a hedge fund manager or a Wall Street CEO to know that something's very wrong with the economy and the stock market right now. I'm not talking just about the embarrassingly bad Facebook (FB) initial public offering. Let me count the problems.
Inflation-adjusted wages have been steadily falling over the past few months, the first time that has happened in a nonrecession environment, as people turn to credit cards and tap savings in response to higher food and fuel prices. Last year, we had the weakest nonrecession annual growth of gross domestic product since the 1940s. The credit channel is broken. Home prices are down to 2002 levels. And the stock market has yet to retake its 2000 or 2007 highs.
Beneath all this is a simmering government debt crisis, as long-postponed hard choices on debt and deficits in the rich world come home to roost. Europe is on the front lines of this. Here at home, a combination of higher taxes and spending cuts in early 2013 worth nearly 4% of GDP -- the "fiscal cliff" I recently warned of -- is set to throw America back into recession.
The longer-term picture is even scarier: If nothing is done, by 2024 -- according to a Credit Suisse estimate -- 100% of U.S. tax revenues will go to entitlement spending and interest payments on the federal debt. That's it. Nothing left for tanks, jets, food stamps and SEC regulators. Nada.
While this seems intractable, the root of the problem is really quite simple: too many old people.
Specifically, the nearly 80 million members of the baby boom generation are quickly aging, with most in their mid-50s now. This simple dynamic is the undercurrent beneath many of our problems, from a stagnant stock market to a bleak jobs outlook and the debt/deficit problem. Here's why.
Not to spoil the surprise or anything, but you've probably gathered that I'm not a boomer. And I'm not here to go after boomers on social issues, or on the way they wasted the Greatest Generation's legacy: America as the world's sole superpower, a dynamic economy, a vibrant middle class and state-of-the-art infrastructure. OK, maybe I'm a little miffed.
Although there are grounds for an intergenerational fight, I'm more interested in the tragic nature of all this. Boomers, fully committed to the postwar consumerist culture and suffering from the rise and fall of two epic asset price bubbles, haven't saved enough for retirement. They also didn't have enough kids -- you know, sexual revolution and all. I'll have more on that in a minute.
Rising life expectancies make the problem worse. And long-stagnant wages for the middle class haven't helped.
The 2012 Retirement Confidence Survey (.pdf file) by the Employee Benefit Research Institute paints a grim picture. Only 14% of workers are very confident they will be able to afford a comfortable retirement. Some 60% of workers report that the total value of savings and investments, excluding the value of their primary residence, is less than $25,000. And while 56% expect to receive benefits from a defined-benefit plan in retirement, only 33% report that they or their spouse currently has such a plan.
Clearly, false hope and procrastination are at work.
Thus, instead of enjoying the twilight of life atop a Harley or upon white sandy beaches, a lot of these folks will be staying in the workforce -- often at low-paying, menial positions -- just to survive. The percentage of respondents expecting to retire before the age of 60 has fallen from nearly 20% in 1991 to just 8% now, while the percentage of workers expecting to clock out at 70 or older has jumped from 9% to 26% over the same period.
With the stock market coming off its worst 10-year performance since the Great Depression and with housing still in the tank, that's not surprising. But here's the kicker: By clogging up the job market, this army of gray labor will make it harder for the cohort of would-be workers ages 16 to 34 to get any traction. And that will only get worse, because the oldest boomers are now 66.
Younger workers are the folks who put money into housing and the stock market; they're the buyers who allow older folks entering retirement to cash in those assets. They also pay the taxes that keep entitlements like Social Security going.
It's a vicious cycle. Boomers are working longer because they can't retire, and they can't retire because their homes and nest eggs aren't holding their value, much less gaining. This keeps younger folks from taking over their jobs, which would allow the younger folks to buy those homes and start building their own nest eggs, pouring fresh cash into investments. (Instead, it seems, a lot of those younger folks are moving back in with their boomer parents. The cycle of misery is complete.)
No wonder net household wealth in the U.S. is down 15% from its pre-recession peak.
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A democracy is where the majority rules. An auction is where the the highest bidder wins. The majority of people believe in god and worship in churches of different denominations. They take god out of the plege of allegiance to please the minority. The rights of the majority are neglected and the democracy is violated. Blaming the baby boomers to distract from problems of our democracy is a bad step in the wrong direction. Their is a definite morals problem showing up in massive quantities causing financial failure in retirements for boomers. Embezzlement or IOU's from the social security by the government is an example. Pay it back with interest or be prosecuted by the boomers is an option.
I BLAME INSURANCE COMPANIES, BANKS, BIG CORP. AND STOCKMARKET..IN OUR YOUTH THEY TOLD US TO INVEST..GET 401K,STOCKS,AND PLANS FOR RETIREMENT..THE FACT THE BABY BOOMER DID INVEST..NOW THEY'RE WORRIED BECAUSE WE'RE LEAVING THE WORK FORCE AND THEY HAVE TO COUGH OUT THE MONEY THEY PROMISED..WHEN THEY STARTED PAYING IT PUT CORP.IN BANKRUPTSY AND AND RESRUCTURING..STOCKS ALL OF A SUDDEN WERE OVER PRICED AND LOST 50% OR MORE IN VALUE..THEY DIDN'T HAVE THE MONEY..
HOW DID GOV.FIX THINGS..RAISED TAXES TO SAVE TEACHERS,FIREMEN, AND POLICE..THEY COULDN'T SAVE OUR JOBS AND INVESTMENTS..BUT THEY SAVED THEIRS..WHY SHOULD WE SAVE THEIRS ..NOBODY SAVED OUR INVESTMENTS..
THEY'RE RUNNIMG FOR OFFICE..PEOPLE LIKE ME DON'T COUNT..I DON'T HAVE ANYTHING AGAINST THESE PEOPLE..DON'T RAISE MY TAXES TO SAVE THEIR BENIFITS THAT WE HAVE LOST..THANK YOU..THEY EVEN LOWERED THE EQUIDITY IN MY HOUSE..I HID MY STORE BOUGHT TEETH..
I could not have said this any better unless I was wearing a brown uniform, living n German in the 1930"s and sporting a Nazi arm band on my arm. Sorry that baby boomers are living longer and enjoy being part of life. I never got the memo that said I had to leave the work force. I did not get the the memo that said all my savings would be reduced by poor regulations of banks and finace institutions. These words have been said once before in Nazi German, interesting they are being said today.
What other groups can we blame for the worlds issues. Maybe locking everyone up in camps will solve the problem instead of just taking the responsibility to do your own share to make this a better world.
Lies all Lies!
The current state of the economy is a direct result of a failed Federal programs! And how Bill Clinton used the housing market to prop up the economy under his presidential era. It's all quite simple, however the masses don't have a clue!
It's apparent Republicans control population and grow the economy through war.
While Democrats control the population through disease, and grow the economy by raising prices.
Since I met Obama, I've lost a million dollars in assets on paper, including my home by divorce.
33,000 Enron employees lost their 401K retirements to a Corporate thief named Jeff Skilling, CDM (Chief Decision Maker) for Ken Lay. Add to that Scrushy, Kozlowski and a host of non-Boomer corporate Johnny Jump Ups ready to jump up and down for their Masters of the Moolah. Up to and including bilking employees of payroll deductions for retirements and pensions.
Now, all these envious little JJUs can't stand that their Gravy Train ride is over and for once in their pathetic lives, their parents and other older Boomers won't play safety net anymore. Sorry, you're all too long in the tooth for kiddie games and when you screw up, it's time to man up.
Wow......that has to be one of the most biased articles ever written. He stopped just short of suggesting Soylent Green.
I think he needs to invest in a bit of therapy regarding his feelings about his parents.
This writer is too loose with his "facts." BBs did not cause the problems he cites. This has and continues to be a Dem and Pub problem, exacerbated by their poor management of our tax money. It's mostly now a Dem problem, i.e., Obungles, but Bush and his predecessors had a hand in the till long before Obama came along; he's just made it worse. And Obamacare; what a nightmare. Many folks told us so, but we're now seeing drips and drabs of what it's going to cost us, and it ain't funny, folks. And, it won't fix the health care expense problem, either.
The housing bubble was not caused by BBs, either. The root cause of the bubble was too many loans provided to people who should never have received them in the first place. Other factors played into it, but you're not convincing me the BBs as a group are the root of the problem.
maybe the bottom line is simply this......globalization will continue to put downward pressure on the standard of living here in the US ( the party is over people ) .....there was probably no way to stop it ( I lost two jobs in the past 15 years to outsourcing - one to India and one to Canada....and no I'm not talking manufacturing, I'm talking well paying 6 figure white collar jobs ) ....they are never coming back no matter how much we bi*ch and complain. Don't be fooled into thinking it can't happen to you....no amount of education ( I have two Masters degrees and two professional certifications ) will shield you form this reality. Any job that can be done on a computer here can be done in India or China for much less.
I think those that can have to consider creating their own job.....and yes it's risky, and it's not for everyone, but I think the days of job security are more or less gone. I'm taking a risk to venture out on my own, after yet another job was being threatened by outsourcing.....I have had enough. Life in the US has changed, we must change with it or be prepared for disappointment. This ain't your Daddy's economy.
America has gone soft in so many ways, but the worst way is the total ignorence of financial responsibility, personal responsibility, and basic fundemental education. both at home and in the schools.
Don't blame it on TV, movies, drugs, music etc, that falls under parental responsibility.
More blame comes from the poor leaders of the country, the poor (non-existant values of our corporate, financial, and religious leaders), who personally place their values well before those of any others.
Greed is the consumate objective of all, rich or poor.
Do you like how you're getting your a$$ handed to you? You arrogant know-it-all. When you grow up you might see things for how they really are. Until then, how about just doing articles on the weather. You'll still be able to pay taxes on your income so that we boomers can live the life of Reilly!
with out fedral regulations on business and wall street ,we will have NO economy
This guy is full of BS. the reason we boomers can't retire is because Wall Street made some very risky and poor decisions that collapsed our retirement. And just how many kids are boomers supposed to have? All my boomer friends and I had 2-3 kids. As for us taking the jobs away from them, try having U.S. companies move back to the U.S.!!!
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