Dec 26 2008
Blame America’s Economic Woes On Retiring Boomers
A lot of people are scratching their heads over the current economic downturn, but it really should not be a mystery. I myself have been waiting for it to begin for decades. The inevitable contraction has been exacerbated by really bad, leftist economic policy decisions instantiated over many years. These decisions are the hallmark of those who count their parents among “The Greatest Generation” ever. The contraction and the bad policies that made it worse are the work of the The Boomers – one of the most confused and radical generations ever. And like most confused radicals, they have left us a mess.
I have the fortune (or misfortune) of being one of those who is either at the end of the Boomers or the beginning of the post boomers – depending what year you cut the transition at. Most people use 1960 (my birth year) as the mark that ends the post World War II Baby Boomers. I prefer not to be part of the boomers, who seem to me to be on average (with many wonderful exceptions) to be self absorbed and a bit arrogant.
The boomers are now nearly all heading into retirement. They are selling the larger houses they raised their families in and heading to smaller dwellings in remote (and therefore cheaper) locations. Being a highly successful generation on a personal level, their departure from the market is leaving a mark in many dimensions. And as they begin to feed at the trough of federal and private retirement pools, the impacts are going to be worse yet.
One has to understand how large a group of consumers the Boomers are to appreciate their impact on the economy:
Seventy-six million American children were born between 1946 and 1959, representing cohorts that would be significant on account of its size alone. These several cohorts share characteristics like higher education than previous generations and assumptions of lifelong prosperity and entitlement developed during their childhood in the 1950s.
Because the Baby Boomer generation has found that their parents are living longer, their children are seeking a better and longer college education, and they themselves are having children later in life, the boomers have become “sandwiched” between generations. The “sandwich generation”, coined in the 1980s, refers to baby boomers who must care for both elderly parents and young children at the same time.
The age wave theory suggests an impending economic slowdown when the boomers start retiring during 2007-2009.[7]
Emphasis mine. The age wave theory is clearly more accurate than the Global Warming theory (another pet concept of those radical Boomers). I have know my entire life I would not really see much personal success until the Boomers were well into retiring. There are just not that many positions in society on the upper rungs for everyone, and with the largest group in American history waiting to retire there was a barrier for the rest of us to get our turn at the top.
With the current US population at 300 million, understand that 76 million Boomers is 25% of the entire US population. Think about it. Â When Boomers depart a region or sector then you find the smaller post Boomer generations and immigrants are what is left to fill the void.Â
I knew my age group would actually find a lot of opportunity later in life as the Boomers moved off to pasture. I knew that we would see cheaper housing, luxury goods, retirement options, etc because the Boomers will, from now on, leave a void instead of being a barrier.
And understand the mentality of the Boomers – they rejected their World War II parents. They were radicals obsessed with peace. They despised the military, the hallmark of their parents. Yes, there were a smaller group who respected and followed guidance of the World War II generation (George W Bush followed George Bush Senior, WW II Vet, John McCain, etc). But the Boomers had a very tough act to follow, and they went to extremes to distance themselves from their parent.
The Boomers, in trying to achieve distinction from their parents, tended to be more like Jimmy Carter and Bill Ayers. The interesting thing as been is while they were very liberal, they did not achieve acceptance by the other generations to lead. Nearly all US Presidents have to have a bit of the World War II security mentality in their character, and they have to minimize any liberal tendencies.Â
One only needs to look at the liberal home mortgage loan debacle to see the negative impact of the Boomers. Instead of demanding minimal capability and proven responsibility to handle a home mortgage, the radical bleeding heart nature of the Boomers caused them to try and hand out homes to those not ready for the responsibility. And a normal downturn turned extremely ugly as the result.
Boomers have a Santa Claus complex. They don’t want to demand responsibility, they want to give handouts. They supported the life-long economic trap of the welfare state. It was their idea to give loans to those not ready for them. It is they who seek to ‘level the playing field’ by taking from the wealthy. Except their money of course. They believe they are saving the planet by being green and following the Church of Al Gore. They have spent their entire existence trying to be more than their parents generation.
Even the one gift to mankind they did produce has become tainted with revisionist history and commercialization. Rock and Roll is the product of the Boomers. It was the power that swept a shattered post World War II Earth in the grip of a Cold War. While most Rockers were still raging against the machine of their parents, the message resounded behind the iron curtains of communism and began to open minds and eyes to a new world. The raging against the machine was very real to those under oppression.
And the fact that America’s newer generations agreed with the message created a world-wide bond that set the stage for a trust that would see the end of communism as iron curtains fell all over. Communism has always been threatened by capitalism, and all threats are met with force. Until the threat was reduced, there was no way to walk down the forces who were on a hair trigger, waiting for the inevitable next World War.
Rock & Roll was the avenue for building bridges and trust. It was the music more than the lyrics, in my humble opinion. It was the one thing the Boomers did that really did do something historic. But to this day they still see this phenomena as an act of revolution against the evil US Machine – their parent’s America. The Boomers are a very faulted generation. They rebelled against a great generation, they consumed madly and brought in the age of the ‘me generation’. In their mind they measure things by what value it brings them. They have tried to escape the shadow of the Greatest Generation – and failed.
And now, as they depart, they will leave economic upheaval and pain. Obama and Palin are my generation. It is now time for a much more moderate, less extreme group of leaders to take over. We enjoy the hell out of Rock & Roll and we are moved by the acts of patriotism shown by our armed forces. We savour all sides and are slaves to none. We have no beef with the Greatest Generation, and we have been patiently waiting for the Boomers like Carter and Clinton to make their mess and move on. We are use to cleaning up after the Boomers. We have been doing it all our lives.
“I am a boomer, born in 1951 and no one ever gave me anything. I left home at 17 and have taken care of myself every since. ”
Me too. Also born before 1960.
Don’t currently own a home (but have in the past) but that is more due to location. In my neighborhood a 3br 1960’s ranch “fixer-upper” is a million bucks. Sucks to make a six figure income and not be able to afford a house but can rent in the same neighborhood for 1/3 what a payment would be.
As a Charter Boomer, I really take offense to AJ’s diatribe against an entire generation. I feel as much a victim of the liberal wing of the Boomers as anyone. No one I grew up with rebelled against the WWII generation. We were bought up on patriotism and honoring those who served. I voted for Nixon in ’68, ’72, Goldwater, Ford, Reagan, and both Bush 41 and 43. I despise those who protested Vietnam and prolonged that war as a result. My husband served 4 tours.
Although I don’t consider myself a conservative, I am not a liberal, but more a moderate libertarian who strongly supports the military. I believe strongly in the Bill of Rights and in small government.
As I mentioned, the Brat Boom decade group is REALLY divided. Half were dope-headed rockers. The other half fought Vietnam with one hand while running Apollo Mission Control with the other. If we could have kept the latter, and tossed the former under a Saturn booster, that group would have gone down in history as the greatest since the Civil War.
The World War 2 group…well, they proved brave, but not wise. If you look at the Presidents from that cadre (Kennedy through Bush the Elder), the percentages are NOT impressive. One great President (Reagan), two fair ones (Ford & Bush), and four disasters. Sad, really.
The real question is how future groups will do. Chronologically, Obama is a Baby Buster…but mentally, he is a relic of the worst of the Brat Boom.
As always I just want to take a moment to thank all you youngsters for all the benefits you have voted for me that you won’t be able to afford later on. Can’t get in to see a Doctor… np… just check into the local emergency room… They have to take what Medicare gives them and no bill to me… Just turned 70… paid off my Social Security so I can now re-apply for a higher benefit… and… my young wife will therefore enjoy 30-40 years of THAT little government sponsored annuity. btw, just fyi, Elvis never sang a flat note lifetime. And I remember [in my alzheimerish haze] Nancy Sherk shaking her hips down at the canteen in 1955… Scandalous…
BTW2… Semper Fi from this Marine
Okay, then I’ll say I was born in 1940 and so am not a boomer. but I was about 13 when Little Richard and Bill Haley started ‘rock and roll’, so I’d call that a product of the ‘greatest generation’, not boomers. but that’s insignificant anyhow. My children are gen x’ers and are very responsible adults.
Crossp, you’re a little bit wrong on 401K’s. I quit contributing (retired) several years ago. my 401k has grown by 50% since that time. Fortunately the fund is well set up and has many options, including the ability to be in high return (or loss) foreign markets one day and in a stable value bond fund the next. So it’s easy to ride up and then transfer out when it starts tanking. So, I’m in retirement and can have market exposure, or not, as I desire. It’s well worth it.
but Social Security is gonna be in for a very hard time before long. recipients are getting a 5.3% COL adjustment Jan 1. how many years can that go on?
Who do I blame? Politicians, primarily Democrats.
“The other half fought Vietnam with one hand while running Apollo Mission Control with the other.”
I don’t think so. The oldest boomer would have been still in college in 1969, so I don’t think they were “running mission control”. And as for Viet Nam, boomers would have been the lower ranking young enlisted but would have begun entering into service as officers only as the war was reaching its end. Most of the officers and senior NCOs (and the original crop of combat troops) would have been born before the end of WWII.
The vast majority of the boomers never fought in Viet Nam and opposed the space program as a waste of money. They were all about welfare programs and political correctness. As they moved up into positions of power and control, they established more and more of their utopian policies. Boomers have done things such as banning The Pledge of Allegiance at some public schools to avoid “offending” anyone and have generally done whatever was necessary to bend over backwards to see that nobody was offended by anything.
Boomers gave us things like baseball where no score was kept to keep from hurting anyone’s feelings. Boomers banned tag at school because it was too “aggressive”. Dodgeball has been stamped out. It is boomers who are stamping out Mini-Fenway and the monster snowman in Anchorage. Anything that might lead to fun, put someone’s eye out, or involves the least amount of risk must be stamped out.
All these whiny, wimpy measures are basically what the boomers have given future generations.
link
Age at retirement
• Under 55: 13 percent.
• 55–59: 16 percent.
• 60–61: 11 percent.
• 62–64: 23 percent.
• 65: 14 percent.
• 66 or older: 10 percent.
• Never worked/worked sporadically: 7 percent.
• Don’t know/refused: 4 percent.
• Median age: 62 years
I can’t believe on a supposedly intelligent blog I am reading how its all the boomer generations fault when in fact it is liberal policies of mostly the Democrat party headed by a bunch of out of touch career politicians many of the “greatest generation” that got us into the mess we are in today. I was born in 56, worked in a bakery at age 15, worked 33 hours a week through college, started contributing the max I could into 401k’s at my first post college employment.
I have saved all my life for retirement lost over 100,000 in the market several times but luckily got out before this last dive.
I have paid off every loan I ever took, never paid a dime in credit card interest and paid for a modest home.
I could have had 500,000.00 homes, didn’t need em. I could have drove brand new cars to watch my money disappear, didn’t need to.
And don’t need to listen to someone on a supposedly intelligent blog say its my whole generation who screwed the goose when in fact the retreads in congress are setting their sights on my IRA’s and retirement annuities or contemplating means testing social security so those who lived high and blew it all will have equally as much as I to retire upon.
As Terrye, I have watched many younger than I belly ache, complain, whine, and moan that they don’t have all I have and are 1/2 my age and worked 1/3 as hard for it as I have, max out their credit walk away without paying and let Big Government or soneone else hold the bag. Its’ not a generational thing it is a mindset, a liberal, valuless, narcissistic mindset! To blame an entire generation is absurd.
CP
I think you have listened to much to the real smart mouthed 6 or 7% that always are members of the ‘grassroots’ weird named professional talking heads the media always puts on.
You take them and all the nutroots and they form up combined the 18 to 20% hard left in most polls taken.
They are all mouth and all you see to represent our generation and their actual numbers are somewhere close to the gay membership of the generation.
They just get the soapbox all the time and many think they are much more common than they are.
Well the truth is if you want to blame someone, you can go all the way back to the agrarian populists of the late 19th century. But then again, if it were not for the robber barons there would not have been any populists. The truth is some basic safety net and a few regulations are not the problem.
As for my generation, who gave you internet? The truth is no generation exists in a vacuum. We are all a product of what came before. The Boomers were a product of the Greatest Generation after all. They raised us.
Merlin:
I will work until they make me stop. Most of the people I know can not afford to do anything else.
CP
Don’t get me started on the stupidity of Californica real estate.
I buy houses here all the time for investment.
Even before the housing bust a 3 bedroom with 1 1/2 bath ,carpet in all required rooms, a heat pump on a 50 x 150 lot here goes for about 60k.
If I moved that same thing to the left coast I would be pushing over a million in many places.
All you are is on a wheel in a cage with higher wages but matching costs of living.
I have talked friends into leaving that place and move here to the same type jobs they did there and because of the lower cost of living they end up with much more disposable income even at less than half the wages.
That 60k house after homestead exemption runs you about 160 a year in taxes…how do you match up to that number?
dhunter, don’t get defensive, nobody is talking about you specifically. I am a boomer and I am disgusted when I look at what our generation is going to leave the world with. The one thing we did right before we took it to idiotic extreme was cleaning up the environment. The US today is a *MUCH* cleaner place than it was when I was a kid growing up in the 1960’s. But now we have layered regulation on top of regulation so it is nearly impossible to build anything without 10 years of environmental impact studies followed by 10 years of court hearings.
The policies of boomer conservatives have simply been a defensive battle. It is the boomer liberals that seem to have set the agenda. All the “nuclear free zones” are the work of boomers. Code Pink are boomers. Larry Johnson, Wilson and Plame are all boomers.
But I see promise in the kids today. I am beginning to see the pendulum swing back. Even Saturday Night Live is starting to take shots at the liberal elite. The kids today are signing up for our armed services in a time of war. The reenlistment rate in those services is at record highs. A backlash is forming against Global Warming and other idiotic trendy enviro-insanity. But it will take time. We have a generation of 18 year-olds that have been hearing nothing but “Bush Lied” since they were 10.
The house I live in is a 5 bedroom colonial mansion style house with 2 1/2 baths. I have almost doubled the size since I bought it adding on things like a home theater and pantry areas and such.
I have a walk in refrigerator and and freezer unit and a walk in wine cellar area. I have a 60″ Viking range setup with two gas ovens to go with the gas burners (9 of them).
I have solar hot water preheat and electric winter boost which rarely comes on.
I have 2 four ton heat pumps zoned for the house.
My city gas runs about 8 bucks a month, my water and sewer runs about 45 and half of that is trash pickup fees and escrow funds for the replacement county landfill.
My house sits on 5 acres of land sitting on a beautiful river and has wonderful spreading oaks over 100 years old.
“I have talked friends into leaving that place and move here to the same type jobs they did there and because of the lower cost of living they end up with much more disposable income even at less than half the wages.”
I would have been out of here years ago if it was just me. But my kids have probably the very best array of public elementary/middle/high school ensembles available in the nation. That is mainly the reason why home values have not dropped one iota in this neighborhood during the recent problems. A year ago a house that would have cost me 1.2 million still costs 1.2 million. They just stay on the market a few days longer now.
And if we were to move, I could probably hop over on the other side of the Sierras to someplace like Carson City, Nevada and keep my current job since most of my work is done over the Internet anyway. And if I need to go to the office, take the 1hr flight over (about $150 round trip).
Boy, Crosspatch, it would be hard to be more wrong about retirement finances than you have proposed.
First of all, bonds have been crushed over the past few months. So, anyone in bonds has lost a fair amount. What they have not lost is the income from the bonds, but that does suppose that no companies go out of business and forfeit on the bond payments.
Now, if you have been paying attention, you will notice that TIPS have paid nothing for the past couple of months and that will continue as long as the CPI declines. Also, the cash in money market funds, like at Schwab, have also not paid any interest in December. Who knows how long that will continue.
You have also misstated the 401K deal. Sure, we have to take out at 70, but it is very likely the account will grow faster than the withdrawals, If not, though, nothing says I have to spend my whole distribution. I can just move the money to a taxable account or to a Roth IRA.
But, the most egregious error in your post was the claim that those in or near retirement should not be in the stock market. That might be true if you could guarantee no inflation during the retirement years, but that isn’t a bet I would want to make.
Rick
RickC, I’ll give you an A for your assessment.
Thinking about ‘who is at fault’. there is plenty to go around. the ‘greatest generation’ had their communists, socialists, (that is the group Barack has descended from.) boomers had their war protestors, hippies, etc, that is the group that gave the ones like CrossP described, (no score ball games) gimme, gimme, gimme group.
Let’s use Caroline as an example. watching her in interviews, etc, what does she stand for? She doesn’t appear to have benefitted from a superior education. She wants to ‘inherit’ a high paying political position, supposedly so she can improve the benefits of the gimme, gimme generation. Just what does she stand for?
Every generation has their fruits and nuts.
“First of all, bonds have been crushed over the past few months”
Only for people buying and selling them. If you are retired and bought the bonds for income and are going to hold them until maturity, the market price fluctuations have had exactly zero impact. You would only lose money if you sold them.
So if you are retired, if your investment manager has any sanity, you bought corporate bonds paying some acceptable amount of income without any intention of ever selling them. So current market values of those bonds means nothing to you. It only means anything to people speculating on the price of bonds.
You can learn more about bonds here. People who are retired should not be buying and selling things and relying on market moves up or down. They should be in income investments with preservation of capital as their primary focus.
“Now, if you have been paying attention, you will notice that TIPS have paid nothing for the past couple of months and that will continue as long as the CPI declines.”
And if you had been paying attention, you will notice that series I bonds are currently paying over 5% but you are limited in the amount you can purchase and that rate will vary.
But in things like municipal bonds, blue chip corporate debt from companies doing well, etc. You hold to maturity, you don’t buy/sell them on the market.
“You have also misstated the 401K deal. Sure, we have to take out at 70, but it is very likely the account will grow faster than the withdrawals”
That greatly depends on what you are invested in. At 70 you should be all in income investments and not have a single share of stock unless it is with some extra cash you can afford to lose. The only exception I might have to that are public utility stocks that have paid a decent dividend for the past 10 years and then only of you are diversified across several different utilities in different regions of the country.
I never said you had to spend the entire distribution but you are prohibited from contributing any more once you start drawing out.
Anyone retired with any significant (say over 10%) exposure to the stock market is ASKING for trouble. With a 40% downturn in the market this year and many companies shutting off dividends, anyone who had significant exposure to the stock market just got nailed bigtime and saw a 40% decline in that capital on average.
Anyone within 5 years of retirement or already retired with more than 5% exposure to the stock market is either a moron or is being advised by a moron and needs to get a new advisor.
Oh, and there are safe bets even in economic hard times. Traditionally companies involved in food production and infrastructure such as basic telephone service, energy production, road construction and maintenance, will survive. There are certain things that are required for survival and companies that provide those things will continue to exist, for the most part.
If you want to play on currency speculation with your income and feel the low interest rates are going to continue to depress the dollar, fine, buy foreign corporate debt. Again, if you buy and hold in established “infrastructure” companies, your capital is relatively safe but your income is going to vary according to the exchange rate.
I would not be doing things like buying gold or playing in the stock market if I were older. Gold pays no income, for example. It is a fine place to put a small amount of your cash when you are younger to preserve capital value but when the dollar rises gold will fall and you can lose, too.
When retired the name of the game is to preserve capital. Even if TIPS are paying zero interest right now, you don’t loose any capital on it. So while everyone else is losing money at least yours is stable. And that zero interest thing is only temporary. But it is a big boon for government as they are daily retiring old debt and higher rates for debt at today’s low rates. Government interest paid on the debt is declining rapidly right now.
CrossP, while I usually value your opinions, I certainly wouldn’t use you as a financial advisor.
It seems to apply only for people that are on a fixed income with little chance of improvement and no extra money for investments, etc. What about people that are very well off? would you advise them not to continue to make money and settle for dormancy? why?