Thursday, January 10, 2013

Are Baby Boomers Retiring Only as Metaphors?


We don’t need to examine the Baby-boomer generation too deeply to understand that, as far as retirement goes, they are going to be slower and more cautious retiring during the giant post-recession. Frankly, if I were eligible for retirement in the next 10 years, there would still be no way on earth I would retire early. Having watched the retirement funds and Thrift Savings Plans (TSPs) blown to smithereens by hedge fund gambling, speculation and outright fraud over the past ten years, millions of people who could have retired, can’t and many federal employees who may have entertained the idea, probably won’t.

The psychology is not all that complicated. The U.S. job market has gone from unions having some political and financial teeth up through the 1970s which once required businesses to look at long-term investment and encourage compensation to keep pace with productivity. This changed in stages.

The first straw came through trade and market expansion and global competition coinciding with extreme U.S. deregulation. Not that the original intent was to export all manufacturing and many service jobs into a world economic playing field, or enabling countries that had no unions or labor laws to enslave their people at a level that created a bottom-line market that was impossible to match. This combined with a decline in education standards and a large amount of social changes facilitating a decline in unions through the 1980s to the present; which further caused a substantial shift in non-farm business sector roles reaching nearly total stagnation and a current job market where total compensation does not even feign an attempt to match productivity gains over the past 30 years.

The second straw was the deregulation of trading and commodity bundling. This caused multiple scenarios to become a reality where retirement accounts and savings were rolled into bundles nobody could locate and that were completely gambled without consequence to the SEC or Treasury or even the Department of Justice. When the time came to determine the value of the gambled assets, or even to contemplate prosecuting the bundlers or their firms who defrauded thousands using every vehicle in the financial arsenal from hedge funds to pyramid schemes, things were so scrambled and haphazard that there were limited ways to go after them. (By the way, institutions like AIG are now deciding whether to along with their investors, sue the U.S. taxpayers for having the cojones to bail them out in the first place—rather than letting them go bankrupt while gambling others’ funds).

The third straw became easy to extrapolate. If you are eligible to retire before qualifying for Medicare; you could and would likely be vulnerable to COBRA ending. Any pre-existing condition would proceed in having you figuratively thrown under a bus for the years between that point and 65 years of age, and/or the rest of your life. It is not an irrational fear that you can be retired one day and the next day through the occurrence of a heart attacka stroke, car accident, cancer diagnosis or other medical incident occurs whereupon you can be instantly in a financial black hole for between a quarter-million to a million dollars overnight with no possible hope ofyou or your family paying it back. By the time you are conscious in a hospital bed and know about it, you could have banks foreclose on your home, car, retirement account, college funds for your grand-kids and anything else they can get their hands on before disposing of you entirely. If you don’t have kids who were lucky enough to have become financially secure on their own with an extra bedroom and extra income, good luck.  You may be eligible for Section 8 housing or assisted living, (but don’t bet on it).

We should not be looking at the Baby-boomer generation as an anomaly. They simply appear at this point to be the last generation to grow up under better financial circumstances than their parents. I don’t know if Generation Y and Z are at the point of thinking about these things as much, or if they have been shielded enough to be oblivious still as some of them complete high school this year, but somehow, I doubt it.  Even if they have the naive illusion of invincibility and no conscious fear of being financially ruined for the rest of their lives by a future medical condition or a hospital stay, many are at least cognizant that their parents or grandparents could be.  Guess who the burden falls on thenGeneration Y is and Generation Z absolutely will be incurring a higher academic debt with reduced likelihood of long-term contractslet alone secure salaried or permanent employment. They are unlikely to be able to pay off more than the interest of the loans they are taking on before they are in their 60s—if they are lucky.  

When we combine these circumstances with the 2-million Americans who have been deployed overseas to Afghanistan and/or Iraq in the past 12 years, those of us in Generation X and Y are hopefully far more realistic regarding what we expect from ourselves and our country for the next 20-40 years, namely that if we can operate a keyboard and/or a phone, unless we get a spot on American Idol®, somehow hit a mother load or win at Mega Millions® we are most likely to be working as long as we all shall live.  Most of us were being told in the 1980s that Social Security would be depleted entirely by the time we were in our 60s, so we looked at it as an abstract, not an assumed safety net. If your family tends to live to be older than 70 and you are retiring at 65, do you expect to be comfortable into your 90s? If you can’t rely on your investments or savings being legally protected on any real level and not being bundled and/or gambled away by people in theoretically accredited financial institutions that are still “too big to fail” and who will at most be required to pay nominal fines causing no financial pain to them at all? How about if those same people are unlikely to be prosecuted if they blow it out their noses without telling anyone? 

Under the circumstances, the only U.S. employer who is still even slightly culpable or accountable in any enforceable sense of the word is the government. It is only natural that a federal employee should be cautious before jumping into a precarious world where there is no culpability on anyone’s part but your own once you retire until you are eligible for MedicareVery few people are really considering retirement after a recession that tanked their stocks and obliterated any equity their home may have had and interest on any savings dropped to nothing. Watching sluggish portfolios and a net worth barely moving along, let alone keeping up with inflation, why would they risk retirement?

During the recent recession, many baby-boomers watched retiring friends who fell hard. Some of the falling ones ended up at Wal-Mart® less than a year later where they may work for the rest of their lives as a greeter or a janitorIf they or their spouse, parents or kids experience a sudden medical illness that isn’t covered costing between a quarter and a half-million dollar minimum; or an IRA that mysteriously disappears without a forwarding address, how likely are any self-preserving baby-boomers still in a federal job to blindly follow them?

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