This morning's scan of the news turned up an interesting, worrisome and thought provoking editorial piece on The American Dream dealing with what I'm referring to as the Baby Boomer's "Economic Shock and Awe campaign".
The author points to "16 Statistics About The Coming Retirement Crisis That Will Drop Your Jaw". Honestly, my jaw didn't drop one bit. It simply got tight as I found myself grinding my teeth in a sort of dread filled anticipation.
The beginning of this latest assault on our floundering economy and financial futures will begin on January 1st, 2011, just two days from now, as the first of the official "Baby Boomers" begin turning 65. Over the following 19 years, every day an average of more than 10,000 Boomers will follow suit by retiring and claiming their monthly social security checks. This is absolutely devastating news for a broken system that already, some 6 years ahead of recent estimates, gives more than it receives.
What's worse is that, due to the exportation of the US industrial base, especially over the last 20 years, a large majority of even fully employed Americans have been left struggling to make monthly bills. Add in the fact that borderline fraudulent, and occasionally outright criminal, marketing of credit products to Americans has left a large percentage with mountains of personal debt and you can start to see the bigger picture. According to this 2009 CNBC article, 23% of people surveyed that made over $100,000 per year were already living paycheck to paycheck. Obviously, those making less than $100,000 make up the majority of our increasingly impoverished nation. If people that somehow "floated to the top" are struggling that much, what does it say about those making $30,000 per year or less?
And it's only getting worse as price inflation continues, wages continue to drop and jobs continue to evaporate into the Chinese and Indian ether.
The CNBC article goes on to say that 36% of all people surveyed weren't contributing anything to retirement savings. In fact, 33% of all those surveyed didn't even contribute monthly to regular short-term savings accounts. That does not bode well for the typical Baby Boomer and his ability to survive in a state of retirement. Nor does it bode well for the rest of us.
Of those who actually DO have retirement savings, most have 401k plans...and the vast majority of those is invested in equities. We all remember that during the initial and subsequent downturns in the economy, along with the accompanying shocking "corrections" in the markets, there have been very significant losses for those with their money in a 401k. This wiped out a large percentage of the Baby Boomer safety net. Most 401k plans will never recover the losses incurred unless the markets surge to levels well above what we saw before the "crashes".
Do you expect such a bull market to come back any time soon? I sure don't. Certainly not in time to cover the Baby Boomer asses, at least.
And as for Baby Boomers with pensions - forget about it. The few that even have them are really in no better shape.
Pension plans are in serious danger of going completely belly-up all around. Article after article, since 2008, has turned up in the mainstream news about how severe the money problems are with these pensions. Back in January of this year, Forbes published this article on their website detailing some of the troubles facing the US in relation to debt. The article states, bluntly, that a figure of $3.2 trillion in shortfall for unfunded pension liability nationally is "a more accurate number" when compared to the US Government Accountability Office's estimate of $405 billion at that time.
So, obviously, a large chunk of the Baby Boomer population will soon be relying entirely on their monthly Social Security checks.
According to the article, Social Security had 16 payers for every receiver in 1950. For 2010, that number has decreased to around 3.3 payers per receiver. By 2025, the number is projected to fall to only 2 payers per receiver, though I would expect it to be lower. What that means is that each employed worker will be responsible for an average 50% of a retiree's monthly Social Security payment.
Just think about the burden that will place on an individual's income - if the average monthly Social Security payment was only a mere $600, we'd be talking about an average $300 per month being taken from each working person who, by all rights, would likely be unable to even make the bills before that $200 was taken from them. According to this Wikipedia page, the median income for 18+ workers in the US for 2005 was $25,149. That $300 per month would represent around 15% of their "pre-tax" income. When you consider all the other absurdities, such as the upcoming mandatory health care costs along with medicare/medicaid, state taxes, federal taxes, etc, that average "take-home pay" will likely fall well below today's poverty levels. And we certainly can't count on prices for necessities falling nor on wages increasing.
You see, many of the Baby Boomers in this country have looked at the numbers, heard all about how bad things are going to be, and they just rolled their eyes.
It's all just been too much for them to think about. They've busy just trying to take care of the important things like paying the electric, phone and cable bills. They've been worried about buying new cars and making sure they have health insurance so they can afford their blood pressure meds. They've been paying off their credit cards and trying to pay off mortgages.
They have had no time to worry about tomorrow and what kind of future their children and grandchildren will be facing, nor to worry about what they can do to change it.
And by not worrying about tomorrow, by simply living in the moment and letting the government, banks and big corporations completely run amok, they've essentially passed the financial responsibility for their continued living after age 65 to the next 2 generations - "Generation X" and, as I like to call us, "Generation Why the F***". Simultaneously, they let this country's economic engine fall into ruins and this nation's government become so corrupt that it, today, closely resembles the Beast of Revelations.
In pursuit of the "American Dream", they've turned future generations, of their own seed, into personal slave labor.
Did they somehow think this was a good idea?
The Economic Shock and Awe that we're about to experience, due to this outright negligence on the part of the Baby Boomer generation, is likely to cripple this nation in VERY short order. How long before we have tens of thousands of highly educated, and highly motivated, young people rioting in the streets over their lack of even menial job prospects and their inability to pay for even the most basic necessities?
My guess is not very long. Not very long at all.