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Can Boomers ever Retire ? Vol 65

February 5, 2015

If half of the stuff in your shopping cart says “for fast relief”, you must be a Boomer !

As a Boomer who contemplates retirement at some point, I am filled with many thoughts, most of the negative variety. Where to begin ?

You look around the world, and see that everyone has too much debt. Whether its countries like Greece, who wrote the book on freeloading for a generation, to Japan, who have an aging population consumed with eating their young economically, few of us have the formula on how to survive and retire in today’s world.

Where did the debt come from ?Where was the money spent ? I look at public debt, like governmental deficits and pension under funding, and probably blame healthcare or our generous income distribution programs for most of it. We sure are not spending it on roads or bridges. Personal debt, on the other hand, must be mostly housing related, like mortgages, cause otherwise the other place to look is our waistlines !

Looking at statistics from a few global studies, if you have a net worth of approximately $250,000 USD, you are in the top 5% of the world. If you have a net worth of $800,000 USD, you are in the top 1% globally. Wow ! Anyone with a big house probably has that amount in assets. which probably explains the CHIP mortgage popularity, where you sell part of your future housing profits ( and thr kids inheritance ) for cash today. Of course, we do not live in Africa, China, or India, so those numbers really mean nothing. Perhaps if you are contemplating a move to Ecuador and their cheap living conditions, but otherwise, our Western standards mean you need a lot of cash saved.

We must remember that our houses have gained soo much because the underlying interest rates are at historical low levels, inversely inflating the value of our real estate, and because of the Sellers market that has existed for 30 years. Yes Sellers, as we Boomers asked for big suburban homes with property, bidding up all types of homes. What happens when the next generation, having fewer kids and wanting more of a non-car no-lawn lifestyle, start a Buyer’s market ? How much is your house worth then ? Big ensuites, hot tubs, granite, so what ? Dime a dozen…

I remember buying my first house when interest rates were 21%. I assumes a mortgage at 15%, and thanked god I was not paying the full rate, as I could not have afforded it. That row house was 1,000 square feet, finished basement, 3 bedroom 2 bath, and I paid $42,000. in 1982. That house today is going for a lot more, depending on the market. The point is, if you are counting on your house funding 30 years of retirement, give your head a shake, because you are dreaming. First, where are you going to live ? Yes, you still need some space, maybe a rental with less room ?

Sounds too good to be true, so it probably is. If we Boomers all tried to cash out, sell our houses and downsize to say, a bungalow, it would trash the market, and minimize our cash dreams.

Its not all doom and gloom. I have more than a few friends who believe that the only way they will retire before 70 is with a lottery win. Yes, a few lucky folks will realize this windfall, but the chances of it being you, well, watch out for a lightning strike first. I have other friends who believe that their health and habits are so poor, they will not live past 65 anyway, so why bother to plan for the future. Uggg.

The point is that all the surveys still show household debt at all time highs, with the average Boomer holding less than $50K in their registered retirement accounts. Both vectors are going in the wrong direction. All the experts say you need to retire with no debt, and enough savings to top up the shrinking governments pensions, aid that will start to be clawed back to fund our health care system.

Still we Boomers, buying expensive toys, funding 20-something offspring, and perhaps an aging parent, still spend to the max. I know, maybe we will just keep working forever. Forget that. Technology is already making many jobs redundant. Hopefully you can get one of those part-time Walmart jobs, while you compete with thousands of other Boomers in the same predicament as you are. How are your seasonal skills ?

So, huge debts, no savings, a housing market about to collapse or at least shrink, few jobs, poor health, little hope of a government bailout, what are you thinking ? Maybe it was about that inheritance from your folks ? Not so fast, as governments are already eyeballing that.

Of course the 1% will not have to worry too much, but they will also be under political pressure to fund poorer people’s needs. The class wars will only get meaner, inequality only worse.

This should be a wake-up call for most of us, to spend less than you earn, pay off debts, and downsize your housing while you can still buy something smaller, and have some money left over to augment your savings.

The other way is to gamble your money in the stock market, hoping for a few quick kills. Maybe if you had foreseen the oil price drop, you could have made a killing. What, you did not see that coming ? What makes you think you’re going to see the next big opportunity ?

Its never too late to wake up to reality, and start on a path to financial stability. Otherwise, perhaps investing in Purina Pet Food stock is a good bet, since you will be buying lots of it.

Next on Boomers – WTF ! , boom or gloom, which way do you lean ?

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