Retiring Baby-Boomers and the Threat to the Economy
In America, the conventional wisdom is that the age of retirement is 65, give or take a few years based
on one's profession and/or financial well-being. In other words, work for 30 years as a longshoreman
and you'll probably want to hang up your work boots before you're 65, but pull 9 to 3 shifts as a schoolteacher
for the same amount of time and you might be able to hang on a few extra years.
is nevertheless worth noting that the majority of people in North America have far greater life expectancies
than the previous generations. What this means, of course, is that if people are retiring earlier and living
longer, the state of social security and the ability of pensions to subsidize the active lifestyles of a
healthier contingent of retirees are serious concerns and questions abound as to whether the economy can
support such a state of affairs. Obviously, this causes great stress to all members of the society, from
the elderly who are not sure whether or not their future will be provided for to the younger generations
who know that they may have to bear the brunt of the future economic strain.
Adding a significantly perturbing wrench into the works is the fact that, as we know, the so-called baby-boomer
generation is rapidly approaching that 65 year-old retirement age. They are ready to hang up their hats and
call it a day work-wise, and yet it is hard to imagine that the generation who invented rock and roll and
ushered in the acceptance of all types of mind-altering hallucinogenic drugs is going to head off
into the sunset. Worse, the generation usually defined as being "Baby-Boomer" only began in 1946, after
the end of the Second World War, and extends, by most definitions, into the early 1960s. This means that
we are just about to see the initial effects of the first wave of baby-boomers retiring, and then society
is not going to enjoy a significant let up in the amount of retirees for a good fifteen years or more.
The manner in which this will affect the economy is extremely hard to predict, especially in the US where the systems of health care and social security are intrinsically flawed in and of themselves. The strain of
a greater number of retiring and aging citizens on an economic system that is very tenuous in terms of
safety-nets could be catastrophic for the working class generations who are coming up behind them and
who are going to have to somehow keep the economy propped up on increasingly shaky legs.
Adding to the difficulties of predicting the future is the fact that because America is a society so based
on the individual, it is hard for anyone to predict or determine what an adequate amount of retirement planning
is. In other words, individual investments and retirement planning may yield better results and lessen
the burden on Medicare and Social Security than is generally predicted. These estimates are however tenuous
at best and the general consensus is that the state of the US economy is not going to be all that rosy in
the next 30 years once such a large chunk of individual investors start moving to retirement communities
in Palm Springs to play golf six times a week and drive to the neighborhood grocery store in their electric golf carts.
In short, it may be that the dream of retiring into a paradise of drinking freshly squeezed orange juice
in Florida while competing in a flurry of bridge tournaments and marathons and spending sunny weekends
in the neighbors' backyard may not be a realistic goal for a large contingent of the baby-boomer generation.
The standard of living for baby-boomer retirees who have not planned sufficiently for their golden years
will likely decline, which means that most will have to rely on Social Security and Medicare and cope
with their associated flaws.
What this will mean is that the age of retirement - or at least full-fledged retirement - may no longer be acceptable
at 65, and especially not before that, as workers are going to have to keep working to support themselves since
life expectancy is at one of its highest points in history. Another possible scenario will be that the morass
of scare-tactics that have been used to highlight this problem in the media - scare-tactics that, for once,
don't seem unwarranted - will generate enough fear in the hearts of baby-boomers that they will decide it is
in their best interest to save more money every month in their own personal retirement savings plans.
This may mean a slow down in the present economy due to the decline in baby-boomer buying power -
baby-boomers are normally considered to be a particularly lucrative consumers and generous contributors
to the capitalist juggernaut. Either way, it will mean a drastic shift in some form of the economy,
and will reverberate like ripples in a pond through the country's financial and governmental institutions.
The same economic and social factors (as well as a changing political landscape that eventually experienced
both the Kennedy assassination and the very unpopular Vietnam War) that cultivated a group as large as
the baby-boomer generation also encouraged differing opinions on what it meant to be "American."
This diversity in outlook meant many people didn't feel it was as necessary to hold on to traditional
notions of the American family. As such, once baby-boomers reached maturity, there wasn't much societal
or economic pressure to "settle down" and have a brood of kids. Therefore, the next generation
of working individuals was smaller in number exacerbating the problems we will see after the boomers retire.
Instead, it seems, we will have to think pretty quick on our feet and come up with some ingenious solutions
to some very complex problems in order just to see that our heads don't dip below the surface of the water for
too long a period of time.
Posted in ...Market Commentary