At 56 my mom is smack dab in the middle of the Baby Boomer generation. For some reason, she still thinks that she’s pretty young and hip. Her new obsession has become the weekly sales at Macy’s. I’ve tried hard to tell her that she’s getting old and needs to begin preparing for retirement, but, she somehow thinks that 50 is the new 40. Instead my mom is busy updating her look from somewhere near 1984 into 2001.
I know that at some point reality with hit her like a brick wall, because Baby Boomers, things aren’t going to be as simple as you thought it would be. In fact, I think that a lot, okay most of you guys are pretty much screwed. Here’s why:
- You’re Not Going To Work Until You’re 65
You might want to stick it out, but, there is always someone younger, smarter, cheaper, and heck, cuter, breathing down your neck. They’re hungry for a paying position, and they want your job. To be honest, I want your job. Your tenure and long work history means that you’re often able to command top dollar. You’re expensive to maintain, and your employer would rather fill your seat with someone else. We used to worry about work going to China, India, and other developing countries. While that might very well still hold true, the greater threat to the average working John & Jane Dough is the person waiting in the wings (me), plotting to take their jobs. Hey Bill Gates, say hello to Mark Zuckerberg. But, the truth is that you can’t really blame us… I mean them. You know what I mean.Think about everything that the youth of today has to deal with. They internalized the same cookie cutter advice that was preached from every corner of the universe, and many came out on the losing end of the proposition. “Go to school,” they were told. The better educated you were, the better (read: higher paying) job you would find once you finished school. Now, the average college student will graduate with a debt load of over $25,000, and that’s just for undergraduate study! By the time I finished grad school I had borrowed total of about $75,000. You could feed a family of four in developing nations for years on what I spent just going to school. My salary is nowhere near what I spent going to school. I could kick myself. I need a raise. Or your job. When are you retiring anyway?
- You Haven’t Saved Enough for Retirement
We know that we should be saving as much money as possible for retirement, but the fact is that we are not doing it. The 401(k) contribution maximum is $18,000 for 2015, plus a catch-up maximum of $6,000 for individuals over age 50. If you’re my mom’s age, you can sock away $24,000 tax free, but how many of you will take advantage of that? I would venture to guess that some of you are even leaving cash on the table by not making enough of a deferral to reach your employer’s maximum matching contribution. You should be ashamed of yourselves.On average Baby Boomers have saved just $149,400 in their 401(k) accounts. It’s hard socking away money for the future when you’re having a hard time living today. Believe me, I know that. Unfortunately, when the time comes that you can no longer work, you probably won’t have enough money to keep living at the same standard. A downgrade of lifestyle and living expenses is the most advisable thing to do, but some of you are probably thinking that you can just live on Social Security. I think that you’re wrong.
- Social Security Isn’t Going to Cut It
We have seen the political debates go back and forth about the viability of Social Security. It’s been called everything from “social welfare” to a “Ponzi scheme”. Whatever you call it, and whatever your political views, I’m here to say that you shouldn’t count on Social Security as your sole retirement income, no matter who is in office. Social Security is projected to become insolvent by 2037 if Congress does not act. What will happen before then? Will your benefits decrease? Will Social Security change from its current form into something else?Does anyone remember George W. Bush’s suggestion that you be given your money back to invest it into the stock market? Do you remember how the market crashed and you lost 30% of your portfolio? Depending on where you retire to in this country or another, Social Security might just be enough to live on. But, have you thought about rising medical costs?
- Medical Care Isn’t Cheap And You’re Living Longer
Back in the 1950’s the average life expectancy for men was 65.6 and 71.1 for women. The advances made in modern medicine have resulted in the average projected life expectancies rising to 75.7 for men and 80.8 for women in 2010. While we love you and want you around for as long as possible, the truth is that those advances have come at an astronomical cost
In 2009, the government spent an average of $8,086 per person on Medicare, but estimated back in 2004 that the average health care cost per person over 65 was $14,797. There is a significant gap between what was covered and what was actually spent. Unless you all move to Canada those costs will continue to rise. Healthcare costs are the leading cause of personal bankruptcy. But you have a plan to avoid that. Maybe you can live with your kids.
- Your Kids Can’t Support You
Heck, not only can we not support you, but chances are that we need help too. Have you found yourself becoming the bank of mom and dad? It’s because we don’t have the same opportunities that you did to make a decent living that would support your family. If you would ever let go of that cushy JOB that you’re holding on to with the death grip, we might have a chance. I digress.
Some of you might have allowed your adult kids to move back in with you because they’re having a hard time supporting themselves. Some of you might be living with your kids while they are in the process of starting and supporting their own families. They call people like me, Generation X and a smattering of Generation Y’s, the “sandwich” generation. We’re the meat stuck in the middle between two slices of bread. We just keep getting squeezed from both ends, and there’s no lettuce and tomato to cushion the blow. I don’t know what that means, but it sounds good, so let’s just go with it.
So, what do you do? At the very minimum you should be contributing the legal maximum to your retirement accounts. You should also think of eliminating your largest debt, which is probably your house. Look into purchasing long-term care while you’re still kind of young and sexy. And finally, make a comprehensive plan for how your would like to spend your retirement. That will ultimately determine how much money you need to sustain you.
Finally, make sure that you let me know before you retire so that I can put my resume in. I come with references.