The Burning Platform is one of the more outstanding blogs on the internet, in my opinion. The latest post there has left me shaking my head in wonderment about the younger baby boomers and the so-called generation X. It’s a long post, so I’ll try to give you the short version. The author came across some data that demonstrates clearly that a large percentage of those generations are utterly, totally unprepared for their quickly approaching retirement years. They have next to no savings and they have no one to blame but themselves.
The author starts with this quip:
I stumbled across two mind blowing charts yesterday that had me pondering how generations of Americans had frittered their lives away, spending money they didn’t have on things they didn’t need, utilizing easy to acquire debt, and saving virtually nothing for their futures or a rainy day. We are a nation of Peter Pans who never grew up.
Before we get to what those “mind blowing” charts showed, let’s talk about why the author thinks we are a nation of “Perter Pans”. He spend a lot time and provides a lot of data to show that during the last 34 years, more or less the time frame in which these folks have been in the workforce, in spite of the booms and busts that took place, investments in the stock market have returned an average of 11% and lower risk investment have returned about 7% on average. the point being that had these folks saved even modest amounts from their monthly incomes, they would now have very tidy nest eggs to help them through their retirement years, which are just around the corner. Instead, he found that they lived the good life by buying their McMansions (many of which are under water) and maxing out their credit cards to buy all the latest goodies the Madison Avenue boys told them they couldn’t live without. Saving for the future or a rainy day apparently was not one of their priorities.
Now to the charts and commentary by The Burning Platform:
Over 15% of all people 60 and older and 23% of people 45 to 59 years old have NO retirement savings. None. Nada. Zilch. This means 25 million Boomers and Xers are stuck living off a Social Security pittance and choosing between keeping the heat on or eating a feast of Ramen noodles and Friskies. It seems they let 30 years get behind them. They missed the starting gun.
I’m not shocked that over 50% of 18 to 29 year olds have no retirement savings. With the terrible job market, declining real wages, massive levels of student loan debt, two stock market crashes in the space of eight years, and 4% annual returns since 2000, young people today have neither the means nor trust in the system to save for retirement. Their elders had no such excuse. Just a minimal amount per paycheck saved over the last 30 years would have compounded to well over $100,000, even at modest salary levels. It is disgraceful that 25 million people over the age of 45 have saved nothing for their retirement. Far more disgraceful is the median household retirement balance of $3,000 for all working age households. There are 122 million households in this country and 61 million of them have $3,000 or less in retirement savings.
The far worse data points are the $12,000 median retirement balance of aged 55 to 64 households and the $10,100 median retirement balance of aged 45 to 54 households. These people are on the edge of retirement and have less than one year’s expenses saved. There is no legitimate excuse for this pitiful display of planning. These people had decades to save, strong financial market returns, and if they worked for a decent size organization – matching contributions to their retirement accounts. They didn’t need a huge salary. They didn’t need to save 20% of their salary. They didn’t have to be an investing genius. A savings allocation of just 3% to 5% would have grown into a decent sized nest egg after a few decades of compounding.
… We’ve had decades of faux prosperity aided and abetted by Wall Street shysters, corrupt politicians, mega-corporation mass merchandisers, and Madison Avenue maggots trained in the methods of Edward Bernays to convince willfully ignorant consumers to consume. And consume we did. Saving, not so much. You can blame the oligarchs, bankers, retailers, and politicians for the fact you didn’t save, but it rings hollow. No matter how much propaganda is spewed by the ruling class, we are still individuals with free will. The older generations had choices. Saving money requires only one thing – spending less than you make. Most Boomers and Xers chose to spend more than they made and financed the difference.
That brings us to the question in the title of today’s post: Boomers and Xers _ What the hell were you thinking? Did you buy into the lie that Big Government was going to take care of you? Big Government has already made trillions of dollars of entitlement promises it will not be able to keep. The same is true of the promises state and local governments made about their lucrative pension plans. You, because of the decisions you made, are going to be more than a burden on your children in your old age; you are going to be anchor around their necks while they struggle to make ends meet in an era much less rewarding than the one you took advantage of during your working years.
Don’t look to my generation for sympathy. That well has run dry!
Well, that’s what I’m thinking. What are your thoughts?