What are the baby boomers going to do when they can't afford to retire?
April 28, 2009 10:42 AM   Subscribe

What are the baby boomers going to do when they can't afford to retire?

I've been doing some research about personal finance recently. I'm very fortunate: I'm relatively young (34), make a salary in the top quintile, and have no children yet. As such, I can afford to save a pretty good amount of money each month. Even so, making relatively conservative assumptions, it seems as though I can save enough to get by comfortably, but not lavishly.

Of course, most people aren't in my position. Most people have lower salaries and higher expenses. In fact, most people approaching retirement do not have a nest egg remotely large enough to comfortably handle retirement. I learned in business school that the baby boom generation had a negative savings rate, and it's going to look even more negative after the real estate bust.

So what are they going to do? I'm starting to get really concerned about the upcoming wave of baby boomer retirees.
posted by Clambone to Work & Money (43 answers total) 10 users marked this as a favorite
They are going to keep working and not retire.
posted by The World Famous at 10:46 AM on April 28, 2009 [10 favorites]

Well, the options are:
(1) Retire later than expected.
(2) Lower their standard of living below what they expected in retirement.
(3) Use their political power to tax the younger generations.
Of course, it's going to be a combination of the three.
posted by Durin's Bane at 10:47 AM on April 28, 2009 [5 favorites]

Speaking for my parents who are in the situation you describe: they are not going to retire.
posted by muddgirl at 10:51 AM on April 28, 2009

They'll keep working as their bodies give out, a process accelerated by inadequate medical care.
posted by phrontist at 10:54 AM on April 28, 2009 [2 favorites]

Pure conjecture, but I would imagine that the suicide rate for that age bracket might also take an upward turn.
posted by hermitosis at 10:55 AM on April 28, 2009 [1 favorite]

Inadequate medical care? Maybe for some people in the US. In Canada, they're swamping the medical system with demand for new knees and hips. Some will try to cash out of their houses to fund retirement, increasing the supply of houses and increasing the demand for smaller apartments & condos as they downsize. But that's hardly a new trend and it remains to be seen if it will have a material impact on the real estate market. But lots will continue to work until pushed out my mandatory retirement laws where applicable. You will see more mandatory retirement laws get struck down on the basis of age discrimination (though perhaps this has already happened and is old news by now).
posted by GuyZero at 10:58 AM on April 28, 2009

Also, they'll live longer if they keep working, so there's that.
posted by The World Famous at 10:58 AM on April 28, 2009

My parents (who are technically a few years older than the boomers) have to keep working. They retired from their business (an art gallery), but my dad still paints 6-7 days a week and travels regularly around the country to work with the other galleries that represent his work, and my mom's looking for a job. Aside from the fact that my dad's work happens to be producing art, this is going to be an increasingly uncommon scenario.
posted by scody at 10:59 AM on April 28, 2009

er, increasingly COMMON scenario. I can haz coffee plz?
posted by scody at 11:00 AM on April 28, 2009

Live with their children is one possibility.
posted by goo at 11:00 AM on April 28, 2009

Speaking for my parents as well: They are not going to retire. They're in their 50s, and each of them probably has another 10-20 years left on their mortgages, and no retirement savings to speak of. Honestly, this seems pretty obvious, and your question sounds a bit boasting. Can you really not take look at this objectively, from outside your comfortable position and think, "If I didn't have enough money to retire on, what would I do?"
posted by booknerd at 11:01 AM on April 28, 2009 [8 favorites]

They'll try not to retire, but they'll probably get fired or replaced and have to cut back, take losses, and learn to live on less. Maybe social security will help or maybe their children will help them.
posted by anniecat at 11:02 AM on April 28, 2009

My parents are the risky type; they're going to retire, move, and then immediately start businesses. I'm glad that they're taking this rotten situation as an opportunity.
posted by Alison at 11:03 AM on April 28, 2009

historically, the vast majority of people did work until they died. The rise of the middle class and associated retirement on pension or savings is a relatively new thing, and it's still evolving. Many boomers are going to feel like they got shafted, but they're going to need to keep on being productive members of society until such time as they can afford not to be. It's going to have big impacts on our healthcare system and our culture. I think goo is right that extended family households are going to become more common, as fewer people can afford both childcare and elderly assisted living.
posted by Chris4d at 11:05 AM on April 28, 2009 [4 favorites]

They're going to do what my boomer parents are: do their best, and hit the kids up for money and living space when/if/as needed. If your parents never saved at all, like mine, they've probably already been doing this now and then -- drop in the bucket compared to what is coming soon.

The ones who never had kids... group homes if they're lucky.

The entire concept of NOT living off your kids in retirement is really a modern first-world construct anyway... much of the world would still find the thought of NOT having to care for their elderly parents quite strange.
posted by Pufferish at 11:11 AM on April 28, 2009

"I think goo is right that extended family households are going to become more common, as fewer people can afford both childcare and elderly assisted living."

This, especially when the children (and grandchildren) can move into the boomers' homes rather than the other way 'round. This helps resolve some of the housing market difficulties that GuyZero mentions. Grandparents can massively exceed "paying their way" as members of extended family households accounting for childcare alone.
posted by onshi at 11:12 AM on April 28, 2009

I'm sorry if it rubbed you the wrong way, booknerd; I didn't mean to boast. I meant to convey that if only people in unusual circumstances can afford to retire, then something is out of whack.

I understand that if you can't afford to retire, you don't. That's what I would do. But there's a second question, it seems to me. If an individual can't retire, that's a problem for that individual, and for his or her family. If the lion's share of a whole generation can't retire, that's the kind of thing that can rewrite the rules of the game.
posted by Clambone at 11:14 AM on April 28, 2009

Perhaps you'll see a return of the extended family living under one roof.
posted by Burhanistan at 11:15 AM on April 28, 2009

Personally, I'm going to get out my rucksack and hitch around the world, working on organic farms and enjoying life. Then, when I get to old to do any useful work anymore, I'm going to walk out into the middle of a frozen lake somewhere and jump up and down until the ice breaks.

That, or spend my now-ample free time organizing other baby boomers to lobby Congress to pass new laws to take your disposable income away from you and subsidize my life of Reilly, you annoying little whelp.

I really haven't decided yet.
posted by bricoleur at 11:17 AM on April 28, 2009 [11 favorites]

Keep working, duh! I only know of one person in my demographic who was able to retire at age 60 - of course, he had jobs on the side that kept bringing in $$. My husband and I are growing our "retirement business" now while I'm still working and hopefully it will pay the bills when the big R day finally comes.
posted by Lynsey at 11:21 AM on April 28, 2009

I should add that in academia I have already seen mandatory retirement laws removed as discriminatory and professors are routinely working beyond 70 in so far as they remain in command of their cadre of post-docs and graduate students and serve the same figurehead role they cornered back at age 60.
posted by GuyZero at 11:21 AM on April 28, 2009

Clambone, is your question actually: what is Western society going to do when the baby boomers can't afford to retire?
posted by chesty_a_arthur at 11:22 AM on April 28, 2009

Keep working. My mom was most definitely not a baby boomer, but even her generation couldn't all afford to retire - she worked until she was 80. EIGHTY.
posted by chez shoes at 11:45 AM on April 28, 2009

If the lion's share of a whole generation can't afford to retire, perhaps we'll give up on the myth that people over 65 have nothing to contribute to the workplace, as well as the myth that working for 40 years earns one the right to play golf and do water aerobics for the next 20.

When the retirement age was set, life expectancy was in the low 60s. It's now in the high 70s. There is no reason that a quarter of society, particularly those who have the most acquired knowledge about how things work, should be on permanent vacation.
posted by decathecting at 11:45 AM on April 28, 2009 [8 favorites]

I hear baby boomers say that they will work until they retire. I don't think this will work for them, though, unless some serious labor laws are passed.

Here's how I see it: There's a start-up company, with a job opening. Two candidates apply:

- Candidate A is 92 years old. He's got more than half a century of experience, but his hands shake, he loses energy mid-day, and he doesn't "fit in" with the youthful culture of the rest of the company's employees. The company cannot help but notice that paying for his health and life insurances (which is given to all employees) will be huge.

- Candidate B is 22 years old. He's got no experience. He has abundant energy and enthusiasm, and fits in with the rest of the employees. His health and life insurance policies probably will be low.

If you were the owner of the company, and choosing what's best for your company, which would you choose?

I think we'll see an increase in the news about age-ism, and some laws and pandering to that voting block, until their numbers decrease to a point that they are not a significant majority. Then, they will be in serious trouble.

Social programs that were championed by the boomers in the 1960s, then discarded starting in the 1980s, will have to come back, and they will be in favor of this. It will be another program that they take advantage of, and the expense of future generations.

Sorry if this sounds harsh to the boomers here... I'm sure I'm not talking about you. But, I'm pretty bitter about Social Security.
posted by Houstonian at 11:56 AM on April 28, 2009

(that would be, "work until they die")
posted by Houstonian at 11:57 AM on April 28, 2009

Many boomers still have defined benefit plans. I am incredibly envious of these. Some of the people I graduated from high school with (in 1973) have retired already. People who managed their money well are still going to be able to retire. By manage their money well, I mean having an affordable mortgage, not cashing all the equity out of the house, and not having tons of debt. We won't be able to retire as comfortably, but we'll be able to retire and maybe work part time.

Many of us have retirement savings that got savaged recently, but still have time to recover a bit before retirement. If the criminally horrible American health care payment system is even sub-adequately addressed by the current Administration, it will go a long way towards helping us retire. If Social Security is maintained, and I have health care coverage, many of us will be able to retire on schedule.
posted by theora55 at 11:58 AM on April 28, 2009 [1 favorite]

One question about your own retirement planning: are you counting only interest as available for retirement income, or are you factoring in spending the nest egg over time?
posted by pwnguin at 11:58 AM on April 28, 2009

The number of elderly homeless is rising - people will live out of their cars/trucks.
posted by -harlequin- at 11:58 AM on April 28, 2009 [1 favorite]

My mom lives in HUD subsidized housing for seniors - and they take only 30% of you income - no matter what it is. This has been a serious benefit for my mom, who is living mostly on social security. I foresee a lot more subsidized/shared housing for seniors in the future.
posted by The Light Fantastic at 12:06 PM on April 28, 2009

Hippie Communes.

I'm serious.

We'll finally get the chance to live the lifestyle we were promised was utopia in the '60s! We'll take care of each other, and look after each other, and share the responsibilities according to our physical abilities. It'll cost less to live in a communal setting, and we won't need one of everything to maintain a "household." And, we can probably convince some young whippersnapper doctor to make house calls, if there are a bunch of us in one place!

Just, no stairs. We're talking a ranch-style one level commune. My knees can't take the stairs anymore.

(59 on my last birthday, and it really doesn't look like I'll ever retire.)
posted by Corky at 12:37 PM on April 28, 2009 [8 favorites]

The ones with defined benefit plans and subsidized housing will drive the younger folks into bankruptcy through higher taxes and a torpedoed economy.
posted by goethean at 12:41 PM on April 28, 2009

Sorry if this sounds harsh to the boomers here... I'm sure I'm not talking about you. But, I'm pretty bitter about Social Security.

Depending on your age, there may be no reason for anger. The current population is booming again, so if you are retiring in say, 20 years, the Boomers will be gone (replaced by you), and the workforce will outnumber the retirees again, so social security will be able to work once more.
Of course, you won't be a majority voting bloc power the way the boomers are, so we'll have to try to avoid raising a(nother) generation on the "I've got mine, screw you" philosophy :)
posted by -harlequin- at 12:53 PM on April 28, 2009

As Guy Zero alluded, reverse mortgages figure to aid many retirees. I wonder what experts believe that portends for the industry.
posted by troywestfield at 1:06 PM on April 28, 2009

i think retiring is a very 20th (and 21st) century western concept. historically, people worked until they died.

my folks are a wee bit older than the boomers, but only by a couple of years, and they were relying on GM stock to be their nest egg upon retirement. but GM stock plummeted over the last 10 years or so, and left them with almost nothing compared to what they had. so, they took the settlement their jobs were offering (because they were old and cost more to pay and insure than the young bucks, it was cheaper for their companies to "buy them out" and hire youngins), sold their house (luckily), and moved to a cabin in the woods. they are living extremely, extremely frugally. dad gets a pension (amazing in this day and age) and mom just reached the age of being eligible for social security. so they are scraping by. but it is nothing like they had planned for their "golden years."

i expect that within the next 15-20 years we'll have to start supporting them, which terrifies me, beacuse we don't even have enough money to support ourselves and i am an only child.

so, what do people do when they can't afford to retire? a) they don't, b) they make it work somehow by not living their dreams, c) they rely on family.
posted by misanthropicsarah at 2:40 PM on April 28, 2009

We will depend on the largess of the younger generations for survival.

We're so fortunate, since they hold us in such high regard!

(In actuality I forsee a grim, "Road Warrior" future, where the young prey on the old.)

posted by Rash at 3:14 PM on April 28, 2009

Speaking only for one of us ABBs (Aging Baby Boomers) I would like to say I appreciate your concern but think that it's unnecessary. My first retirement occured several years ago. I've recently accepted an opportunity to re-enter the work force in a position where I'll be in position to mentor younger workers; it they're willing to acknowledge that they don't already know everything. Despite what you learned in business school there are plenty of us who were farsighted enough to have provided for savings and retirement. I'm going back to work primarily to bring my Social Security income back up to the level it was at when I was still working. I fully intend to double dip the retirement system and look forward to leaving my children a nice nest egg when I depart.

And if you're up for a bit of a jog you can join some of us Boomers on June 27th this year.
posted by X4ster at 4:11 PM on April 28, 2009

This baby boomer plans to work until I drop over dead.
posted by pushing paper and bottoming chairs at 6:10 PM on April 28, 2009

My father's plan is to sell his house in the Northeast for 400k and buy one in Florida for 200k. The house is paid off so that's a quick 200k infusion to the retirement plan.
posted by smackfu at 9:28 PM on April 28, 2009

While far from a baby boomer (by some people's standards, at 27 I'm STILL a baby!), I fear the worst. I see most baby boomers more or less forced to continue on the treadmill until someone dies or something happens that causes them to miss work. They'll retire rather unpredictably because they simply can't keep doing what they've been doing. They'll look for something else they can do with what livelihood they have left, but again find themselves scraping by. This is when that awkward call to the kids comes around...

Nthing the 'retirement is a new concept' approach - especially because the companies / institutions that once promised it are essentially non-existent. Ford? GM? Natch. Maybe the government jobs, if you can get them and keep them until retirement. Perhaps the government will print enough money to subsidize group home care for the formerly-middle-class...

No one said life was easy. I knew *while in college* that there'd be no such thing as retirement - which is why I'm living life the best way I know how every day I get the chance.
posted by chrisinseoul at 10:38 PM on April 28, 2009

Seconding the Hippie Communes - my parents (baby boomers) and their friends have always talked/joked about it and I suspect that once they hit about 65-70 that's what they'll start doing. It helps that they own about 15 acres of good land between them and they'll use that to make up for not having cash or income.

That and "work 'til you die". My father is retired from being a govt middle-manager and now does trucking and minor building works/maintenance. Seems a bit backwards to me to get into physical labour after retirement but I suspect it's why he's still alive, even if it does mean the knee replacements won't last quite as long as advertised...
posted by polyglot at 12:01 AM on April 29, 2009

Nthing "retirement is a new concept." Historically, most people worked until they died. They may have transitioned into less demanding work as they aged, but only the very rich had a leisured retirement.

Retirement as we know it originated first with the Great Depression and wanting to set aside as many jobs for young male breadwinners as possible. Women and old folks were told to get out of the workplace and let the men (who, presumably, needed to support families) have their jobs. Thus was Social Security invented.

Later, the return of GIs from World War II who went to college on the GI Plan and needed "good" professional jobs; and the entry of the first wave of Baby Boomers into the workplace reinforced the idea that jobs were for the young and old folks ought to be sitting on the porch sipping lemonade. Thus were pensions and retirement benefits born.

Finally, many jobs in the past WERE physically demanding so there was a reason to want youngins to fill the jobs.

Between the economic crisis, an increase in healthy lifespan and a diminution in prejudice (i.e. the idea that women, older people, and minorities need to "not take jobs away from [white] men") the idea of retirement in those terms is going away. I predict most people now will work for much longer. The fact that more people work physically undemanding "desk" jobs rather than physical or factory labor means that working lifespans are increased - a 70-year-old might not be able to do manual labor but he or she can sit at a desk and work at a computer.

I, a "Cusper" or early Gen X'er, plan to work until I can no longer - and retraining for a job I can love is part of this.

Barriers to working longer have more to do with ingrained prejudice and ageism than just about anything else. And there is the healthcare factor, but if we can get some kind of national healthcare it will take away a reason for companies not to hire older folks.
posted by Rosie M. Banks at 1:34 PM on April 29, 2009

I love the fact that none of the answers have considered the possibility that there won't be jobs for people-near-retirement-age to keep earning money on...
posted by almostwitty at 9:22 AM on April 30, 2009

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