You don’t hear much about the financial status of the retiring baby boomers. Maybe that is because the news is pretty scary. I picked up on this by reading Ballmer’s USA Facts. More recently the Wall Street Journal in an article by Heather Gillers, Anne Tergesen and Leslie Scism in the June 22 edition suggests it is even worse then we think.
The reasons are numerous:
>Low interest rates have encouraged taking on debt- this is new for retirement agers
>Boomers have had to subsidize their parents who have lived longer
>Self directed 401k plans got hit in 2008 and most have not recovered
>Even though there are penalties, 401k plans are often raided prior to retirement
>Public employee retirement plans are generous but underfunded
>Boomers have underwritten their kids’ student loans
>Wage growth since 2000 has been paltry
The WSJ summaries the prospects as follows:
This prospect is upending decades of progress in financial security among the aging. In the postwar era, for a while, fixed government and company pensions gave millions a guaranteed income on top of Social Security. An improving economy led to increased wages. Many Americans retired in better shape than their parents.
The scorecard now is much different:
Without wages, a retiree has few sources of income. The estimated median annual household income among retirees is $32,000, and more than half of retirees (53%) live on less than $50,000, according to “The Current State of Retirement: A Compendium of Findings about American Retirees.” The sources of revenue are Social Security ($17,000),Yield on Savings ($4,000), Depletion of Savings ($5,000),Pension/401K ($9,000), Part Time Work ($4,000) .
The average expenses are $35,000 with Healthcare, Food and Shelter comprising 80%
It is also difficult to predict the federal, state and local tax burden but you can see there is not much cash left for Uncle Sam. In any event, the situation for most retiring Americans is bleak as explained by the WSJ authors:
“In total, more than 40% of households headed by people aged 55 through 70 lack sufficient resources to maintain their living standard in retirement. That is around 15 million American households.”
I am surprised the Democrats are not focusing on this horrible ending for so many potential constituents. It shows mainstream politics have surrendered to fringe captors. 15 million votes could swing a lot of state and national elections.
Source: PE4Fams feed