-Through a combination of procrastination and bad timing, many baby boomers are facing a personal finance disaster just as they're hoping to retire. Starting in January, more than 10,000 baby boomers a day will turn 65, a pattern that will continue for the next 19 years.
=Reliance on stocks in retirement plans is greater than ever; 42 percent of those workers now have 401(k)s. But the past decade has been a lost one for stocks, with the Standard & Poor's 500 index posting total returns of just 4 percent since the beginning of 2000.
- Now 22 percent of homeowners, or nearly 11 million people, owe more on their mortgage than their home is worth. Many are boomers.
-By far the greatest shortcoming has been a failure to save. The personal savings rate — the amount of disposable income unspent — averaged close to 10 percent in the 1970s and `80s. By late 2007, the rate had sunk to negative 1 percent.
-Yet typical boomers are still woefully short on retirement savings. Even those in their 50s and 60s with a 401(k) for at least six years had an average balance of less than $150,000 at the end of 2009, according to the EBRI.
-_ Mortgage Debt. Nearly two in three people age 55 to 64 had a mortgage in 2007, with a median debt of $85,000.
-The recession has helped improve the savings rate — it's now back above 5 percent. Yet typical boomers are still woefully short on retirement savings. Even those in their 50s and 60s with a 401(k) for at least six years had an average balance of less than $150,000 at the end of 2009, according to the EBRI.
There's more in the article. The part that addresses health care costs is particularly grim.
For some, who laughed at Walmart greeters in the past, you may see yourself in the article and the idea of a job as a lowly greeter may be something you'll need to wait in line to get...as you 'work till you drop.'
Very bleak outlook VC. Lucky for me, Ive been a tight wad. Yet that is not to say that I would not avoid any employment after retirement. Cannot imagaine myself busying myself with days on the beach and rounds of golf until my hour comes. The modern age has culivated a false sense of security, and has fostered a herd mentality.
Except for the mortgage thing.... I only owe about $13,000 on a house worth about $275,000... But, the rest of the article is pretty much spot on. My biggest problem has been savings... Currently putting 5% in 401k with 4% employer match. Realistically, I need to be putting in 15% or more. Have been focusing on paying off debts. But, it's always something... Almost had everything paid off and then my wife's engine spun a bearing in her Dodge Intrepid. Wound up buying her a new Chevy Impala in March, 2008. Then ran into a "deal I couldn't refuse" and bought myself an F-150 in December, 2008. Financed them both for 5 years. In 2009, spent almost $30K putting in a long overdue new kitchen in our house (paid cash for that)... Got my wife's car paid off in only 2 years, and, projecting to pay off my truck by the end of three years, and the mortgage by mid-2012.
But, like I said... always something. We got a new medical plan at work with a large deductible...and then I had to run a credit card up for the first "real" medical expense I've ever had a couple months ago. And, then, the transmission went out on my son's car, so add another $1600 expense on a car worth a grand, then there was Christmas, then two days ago, our big screen in our bedroom went out, now I've discovered that I need to get an exterminator to treat my house for fricking termites which I suspect will cost another couple G's......
Yep, very grim. We can begin to point fingers at our lousy public indoctrination program called public schools. They enjoy wasting money on feel good things like diversity training and self esteem building instead of important things like life. Financial responsibility, real life does pick winners and losers. This country is going to be screwed. The real problem is going to come when the masses choose to come after the nest eggs we smart people have put aside.
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John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
Sad thing is that I have known better all along... But, I've got another fifteen or so years to work, and should have all debts paid off in two, so will be able to stash a reasonable amount of cash. But... won't be able to maintain quite the same lifestyle after retirement, and it would have been much easier if we had committed to a decent savings program 25 years ago...
We are all gulity as charged in one form or another. Just when one salts away a few bucks there is always something that bubbles to the surface that needs immediate attention, which is a fact of life. I have often argued with myself, if it was wise to of purchased this old farmhouse for 17k and spend the time and money to bring it up to snuff or would it of been better to of purchased a new one and of been done with it. Although I can account for the money spent, the time put into this old structure escapes me. The prospect of a 12 or 14 hundred dollar monthlly payment coupled with utilities scared the hell out of me, as my job wasnt written in stone either. It was to late for me to become a Lawyer or Doctor, so it was pointless trying to live my life as one. No one owes me anything, and when I check out it will be a clean departure, my reward is that my kids have understood the value of the dollar and the job that pays it. They did not learn this in school.
$150k at 4% per year is about $6k per year income, or about $500 per month before you subtract for the taxes you owe on the withdrawal from a 401k. That minus the money required to service an $85000 mortgage has got to be equal to about zero as a remainder.
It appears that many people in this demographic are going to be living on mostly social security income. And many of those dollars will be spent on health care.
FM, we need you, bro. Please keep contributing so that our fellow citizens can continue to enjoy their benefits.
I had no idea it was the bleak out there. I can't imagine how this will shake out over a 10 year period.
There aren't enough jobs now. Since the boomers represent a huge number of Americans, if they do not step out of the work force as elders normally do, there will be a higher supply, which will drive wages and salaries downward, or at least you would think it would.
VC, it's well beyond me. The solution will be stiff medicine, that's not my fault however, not taking it now will only delay. If things get as bad as predicted, I know we have plenty of old military towns recently shut down that could serve as public housing. Looks like people will be moving and living very frugally.
__________________
John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
Looks like people will be moving and living very frugally.
If you're right, there will be a glut of larger homes. Generally, boomers have moved several times and each time purchased a more expensive home.
I wonder how some people are going to survive on what will be social security income only if they live in some of the country's more expensive areas. Even if you have no medical expenses, how could you survive on maybe $15,000 or $20,000 per year? I don't think you could afford your home maintenance and property taxes, let alone vehicle expenses and maintenance, insurance costs, utilities...
If you're right, there will be a glut of larger homes. Generally, boomers have moved several times and each time purchased a more expensive home.
I wonder how some people are going to survive on what will be social security income only if they live in some of the country's more expensive areas. Even if you have no medical expenses, how could you survive on maybe $15,000 or $20,000 per year? I don't think you could afford your home maintenance and property taxes, let alone vehicle expenses and maintenance, insurance costs, utilities...
Don't say that. I want to sell my McMansion in a few years and downsize to something on the water.
__________________
John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
This will be interesting...
