AP: Baby boomers near 65 with retirements in jeopardy

[Omaha Steve]

http://apnews.excite.com/article/20101227/D9KCFRL80.html

By DAVE CARPENTER

CHICAGO (AP) - 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.

The boomers, who in their youth revolutionized everything from music to race relations, are set to redefine retirement. But a generation that made its mark in the tumultuous 1960s now faces a crisis as it hits its own mid-60s.

"The situation is extremely serious because baby boomers have not saved very effectively for retirement and are still retiring too early," says Olivia Mitchell, director of the Boettner Center for Pensions and Retirement Research at the University of Pennsylvania.


In this photo taken Wednesday, Tuesday, Dec. 8, 2010, Michael Vanatta stands on the boardwalk near where he takes a photo each day of the sun rise in Vero Beach, Fla. for one of his blogs. Vanatta, 61, is paying the price for being a baby boomer who enjoyed life without saving for the future. He put a daughter through college, but he also spent plenty of money on indulgences like dining out and the latest electronic gadgets. Vanatta was laid off last January from his $100,000-a-year job as a sales executive for a turf company. And with savings of just $5,000, he's on a budget for the first time. In April, he will start taking Social Security at age 62. (AP Photo/J Pat Carter)


There are several reasons to be concerned:

- The traditional pension plan is disappearing. In 1980, some 39 percent of private-sector workers had a pension that guaranteed a steady payout during retirement. Today that number stands closer to 15 percent, according to the Employee Benefit Research Institute.

- 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.

FULL story at link.

[LiberalEsto]

1. "Didn't save for retirement"

My husband worked for Fannie Mae for 17 years. His retirement savings through Fannie was invested largely in Fannie Mae stock. Just before the stock was about to tank, Fannie execs expressly forbade lower-level employees to sell their stock. Meanwhile the execs sold their own stock and made out very well. The result was that Fannie workers who were not top execs got screwed when they ended up with worthless stock. My husband lost around $50,000, but some of his co-workers lost as much as $1 million.

We might have been saving retirement money over the past few years, but instead we are paying hundreds of dollars a month for our kids' private student loans, and will be doing that for the foreseeable future, since neither one has finished college, and consequently can't afford to make loan payments themselves. Also, I've been unemployed, without benefits, for going on 27 months.

If younger generations want to complain about our failure to save, so be it, but keep in mind that some of us would have saved if it had beenhumanly possible. As it is, I'm terrified of what our future will be like.

[Speck Tater]

2. I retired 3 years ago with zero savings and I'm doing fine.

It's a simple matter of voluntary simplicity.

I don't have a 22-foot RV or a vacation home in the Bahamas. I don't live in a 4,000 sq-ft house. (800 sq ft is more than I need) I don't drive a shiny new Lincoln Continental. (My 1993 Mazda works just fine.) I don't really like dining out; it's crowded and noisy and I always feel like I'm being rushed through my meal. I have NetFlix and Hulu for entertainment. I read a lot. I live out in the country with plenty of room for a veggie garden so I grow and freeze or can most of my veggies. I don't buy factory food, I buy basic staples and make my own food from scratch.

Many of these people who are moaning and groaning about not having enough money are classifying a whole lot of luxuries as necessities. Keep it simple and you'll be happier in the long run.

[LiberalEsto]

4. We don't have expensive wishes

Nearly every stick of furniture in our house is from a thrift store or garage sale. Our clothes mainly come from yard sales. We have one car, a 6 year old Toyota Matrix. I grow vegetables, strawberries, blackberries and figs. We don't go to concerts, plays or the movies. Our only vice is books, but we buy from used book stores and donate our unwanted books to the Friends of the Library.

I don't know how we will manage to pay the mortgage (still owe 20 years) and property taxes, and the kids' student loan bills when my husband is no longer working, if that day ever comes. It looks like we'll have to give up the house and garden and move into a trailer or something.

[starroute]

9. Why are you paying off your kids' student loans?

If they didn't finish college and don't have decently-paying jobs, their own payments should be correspondingly low. Or are these private loans where you had to co-sign and are on the hook for he full amount if the kids don't have the money?

[LiberalEsto]

12. Private loans

because there were no other kind available at the time, and they didn't qualify for financial aid.

We are stuck for at least $767 a month, once the younger one finishes her associate's degree from a community college in May. She's given up on getting a 4-year degree in elementary ed because it's financially impossible, and hopes to work as a substitute teacher.

[elocs]

8. I already live a life of voluntary simplicity so it will be easy when I retire in 2014.

I will actually have more money coming in then than I do now and my expenses will be less. My life has not been dedicated to acquiring stuff and its consumption, so retirement will be easy for me.

[progressoid]

10. So...

What will you do if you have a financial emergency? For example, an expensive health care need.

I'm not criticizing; just wondering since we are in a similar position.

Frankly with the financial turmoil we've been through in the last decade, I have given up on the possibility of retirement. We have a small amount of investments but not enough to live on and I'm not counting on SS to be much help in 20 years. Retirement really isn't an option at this point.

[Speck Tater]

11. As for health emergency...

I live by myself, so it only my health that is of concern. If Medicare doesn't cover it then whatever it is won't get treated. I'm not going to live forever, and I'm prepared to let nature take its course. I'm certainly not going to spend ungodly sums of money for heroic treatment of something that can't be cured, like so many people do. Hundreds of thousands of dollars for a few extra months of life with tubes sticking our of me is not worth the trouble.

My father had cancer and got all sorts of heroic surgeries and treatments and died about ten months after diagnosis. His twin brother then got the same kind of cancer and declined all treatment. He died about ten months after diagnosis. All things considered, my uncle had a much better quality of life for those last ten months than my father did. Heroic treatment accomplished nothing but make his life more unpleasant with all the surgeries and other invasive procedures that, in the end, did not prolong his life or improve his quality of life.

[BeyondGeography]

3. This country is un-fucking-livable

The amount of money needed on hand for the health care industrial complex is indefensible.

Employers know people in their 50's are scared shitless and leverage the hell out of them in the name of freedom.

They get discarded and everyone says how they fucked up by not saving enough. How to save when incomes are stagnant and college education costs up to $250K? Get fucked.

And then there's the 401k scam, which makes defined benefit pensions look aristocratic inheritances. Next up: Moving the goalposts on SS.

Such a shit storm in the making.

[customerserviceguy]

5. A $100 K a year job, and all he managed to put away was $5,000?

I can't say that I've been a great saver over the years, but even though I started only this year, I've got more than that put away on about third of this guy's salary.

At 55, I've only got a relatively short time horizon to pile something up, but since I got myself into a position to save something, I've realized that now is the time to begin salting it away. If you don't learn how to use thrift in your 50's and early 60's, you sure aren't prepared to live a retirement where thrift will be enforced upon you.

[whathehell]

7. Isn't the problem more about the government "enforcing" something on you

than retiree "attitude"?.

Obviously, retirement forces everyone to live at least somewhat more modestly, but retirees in other countries get to retire earlier and

with a greater safety net than we have.

[dixiegrrrrl]

6. Those of us who DID save via retirement funds got wiped in 1999.

And again in 2008.

One of my retirement funds was in an AIG annuity, which I could not take out until a certain date.
fortunately, I got it out just before AIG crashed.
Another one was in a "managed" retirement fund, via Cds in ...Lehman.

I did better than most ONLY because I turned the magical 59 and 1/2 in time to get my retirement funds out before the 2008 crash,but that money had not fully recovered from the 1999/2000 drop.

there are lots of soon to retire folks who DID save money, but are not yet at the "magic" age where they can afford to take out their dwindling retirement accounts.

Looking back, I view the whole 401-k/IRA deal as a massive set up.