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The New Retirement: Baby Boomers on the Brink (Part 1)
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I’m not embarrassed to admit it, I’m a baby boomer. My friends and associates are also boomers, fifty-something professionals and business owners, most of whom have done pretty well both personally and financially. We listen to the same music, wear the same clothes, take the same vacations, share the same memories, and worry about similar futures.
One thing we’re all thinking about a lot more than we used to is retirement. But something that creeps into these conversations is the slow realization that our retirements are likely to be different than our fathers’ retirements.
Ozzie’s Retirement
I know a man (let’s call him Ozzie), who fought in the Pacific in World War II, went to college and graduate school on the GI bill, and took a job as a guidance counselor with a large school district on the North Shore of Chicago. He worked there over forty years. He raised four children with the same wife. He received regular raises and made over six figures when he finally retired. With his defined pension benefit, his Social Security, Medicare and Medi-gap supplement, Ozzie has it better in retirement than he’s ever had it in his life. So far, his golden years have been just that, golden.
Bruce’s Retirement
Bruce Springsteen sings a song entitled “Glory Days.” Like a lot of The Boss’s songs it’s about a future unrealized. Old high school friends get together and relive their athletic and other accomplishments. Unfortunately, there’s little pleasure to be derived from the reunion because things have only gone downhill since those glory days. Marriages have dissolved and failed, careers have faltered, and the promise of youth’s flower has failed to bloom.
As successful as most of my boomer friends have been, there’s a hint of The Boss and Glory Days whenever the topic turns to retirement. We’ve got good reasons to be nervous.
- All of us lost money when the equity markets crashed—some as little as 10 percent, others as much as 30 percent.
- We worked for employers that provided defined benefit pension plans, but many of those plans are now under-funded, the employers have gone bankrupt, or the plans have been converted to cash balance plans that result in older employees receiving less than they we have received under the defined benefit plan.
- We changed jobs a lot over the years in an effort to make it to the top of the corporate ladder. Some of us weren’t vested in our pension benefits when we left one employer for another. Our new employers offered incentive compensation and employee retirement savings plans instead of defined pension benefits.
- Some of us didn’t contribute as much to our employee savings plans as we should have, or when we left Corporate America to start our own dot com businesses, we used our 401(k) balances as seed capital.
- Some of us got divorced and remarried more than once. Some of us have needy, clingy, even greedy ex-spouses. Some of us lost everything to them.
- Some of us have children who are old enough to qualify as adults under state law, but lack adult skills in self-sufficiency. They have the audacity to continue to ask us for money well into their 20s and early 30s.
- Some of us remarried people young enough to be our children who have bore us new children. These new spouses and children have wants and needs that know no boundaries.
- Some of us have parents not as well situated as “Ozzie.” Many of them have escalating prescription drug costs that eat up large chunks of their fixed retirement incomes. They seem to think we have an obligation to help them through their tough times.
- Even with all the stress, my friends and I are likely to live much longer than we ever thought we would. In fact, if medical care continues to improve, we’ll spend most of our lives as part of the elder generation.
- That is, if we can afford the medical care. Most of our employers will not pay for or contribute to the cost of post-retirement health insurance. Consequently, we’ll get what we need in medical care, but not necessarily what we want. We’ll stay alive, but will require long-term care.
- Most of us are doubtful about the future of Social Security. In our youths, we were cocky enough to believe we wouldn’t need it.
Rather than looking forward to retirement as our golden years, many of my boomer friends see retirement as just a whiter shade of pale. In my next post, I'll consider some strategies Baby Boomers can use to help them think about retirement a little differently. Because, baby, it's going to be different.
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