Back then you could easily see the 1990s would be a period good for the stock market as boomers put money away for retirement.
When I was looking at those age charts, I shifted them to try to gauge when boomers would hit retirement to try to understand when deflation would occur. Back then I had 2006 as my loose target for deflation.
The reason I felt deflation would correlate with boomers has everything to do with spending habits. In a nut shell, the demographics do something like this for someone retiring: Hmmm, I'm going to retire from my job, sign up for social security, move into a smaller home, maybe some where else where it's cheap with no state taxes, and reduce my spending because I'm on a fixed and limited income.
Recently: Poll reveals baby boomers' retirement fears
WASHINGTON (AP) -- Baby boomers facing retirement are worried about their finances, and many believe they'll need to work longer than planned or will never be able to retire, a new poll finds.
The 77 million-strong generation born between 1946 and 1964 has clung tenaciously to its youth. Now, boomers are getting nervous about retirement. Only 11 percent say they are strongly convinced they will be able to live in comfort.
A total of 55 percent said they were either somewhat or very certain they could retire with financial security. But another 44 percent express little or no faith they'll have enough money when their careers end.
Further underscoring the financial squeeze, 1 in 4 boomers still working say they'll never retire. That's about the same number as those who say they have no retirement savings.
The Associated Press-LifeGoesStrong.com poll comes as politicians face growing pressure to curb record federal deficits, and budget hawks of both parties have expressed a willingness to scale back Social Security, the government's biggest program.
The survey suggests how politically risky that would be: 64 percent of boomers see Social Security as the keystone of their retirement earnings, far outpacing pensions, investments and other income.
The survey also highlights the particular retirement challenge facing boomers, who are contemplating exiting the work force just as the worst economy in seven decades left them coping with high jobless rates, tattered home values and painfully low interest rates that stunt the growth of savings.
"I have six kids," said Gary Marshalek, 62, of South Abington Township, Pa., who services drilling equipment and says he has repeatedly refinanced his home and dipped into his pension to pay for his children's college. His inability to afford retirement "sounds like America at the moment," Marshalek said. "Sounds like the normal instead of the abnormal."
Marshalek was among the 25 percent in the poll who say they plan to never retire. People who are unmarried, earn under $50,000 a year, or say they did a poor job of financial planning are disproportionately represented among that group.
Overall, nearly 6 in 10 baby boomers say their workplace retirement plans, personal investments or real estate lost value during the economic crisis of the past three years. Of this group, 42 percent say they'll have to delay retirement because their nest eggs shrank.
Though the first boomers are turning 65 this year, the poll finds that 28 percent already consider themselves retired. Of those still working, nearly half want to retire by age 65 and about another quarter envision retiring between 66 and 70.
Two-thirds of those still on the job say they will keep working after they retire, a plan shared about evenly across sex, marital status and education lines, the survey finds. That contrasts with the latest Social Security Administration data on what older people are actually doing: Among those age 65-74, less than half earned income from a job in 2008.
"I'm going to keep working after I retire, if nothing else for the health care," said Nadine Krieger, 58, a food plant worker from East Berlin, Pa. Citing $50,000 in retirement savings that she says won't go far, she added, "We probably could have saved more, but you can't when you have a couple of kids in the house."
About 6 in 10 married boomers expect a comfortable retirement, compared with just under half of the unmarried. Midwesterners are most likely to express confidence in their finances.
"I'm a good planner," said Robert Rivers, 63, a retired New York State employee in Ravena, N.Y. He still works seasonally for the federal government and collects a modest military pension. A recreational pilot, he says he has scaled back his lifestyle by flying and driving less.
"I'm spending money I have, not spending it and trying to repay it," he said.
Among boomers like Rivers who plan to continue working in retirement, 35 percent say they'll do so to make ends meet. Slightly fewer cite a desire to earn money for extras or to simply stay busy.
Excluding their homes, 24 percent of boomers say they have no retirement savings. Those with nothing include about 4 in 10 who are non-white, are unmarried or didn't finish college.
At the other end, about 1 in 10 say they have banked at least $500,000. Those who have saved at least something typically have squirreled away $100,000, with about half putting away more than that and half less.
Despite the worries and dearth of savings cited by many, only about a third of boomers say it's likely that they'll have to make do with a more modest lifestyle once they retire. Only about 1 in 4 expect to struggle just to pay their expenses.
Financial experts say such expectations are often not realistic.
"Most families have to make a significant adjustment from their working lives to their retirement years," said financial planner Sheryl Garrett, who runs the Garrett Planning Network. Ads that show silver-haired couples strolling off into the sunset do not represent the typical retirement, she added.
There are some great stats in this poll
1) Only 11 percent say they are strongly convinced they will be able to live in comfort.
That means 89% will live an uncomfortable retirement. That has to impact spending habits and where boomers live, that means somewhere cheap like Detroit or Stockton with a lot less consumer spending.
2) 44 percent express little or no faith they'll have enough money when their careers end.
That's because they've done a very poor job of saving money. During their 40s and 50s they were raising families and keeping up with the Jones. There's been little motivation anywhere to save.
3) 64 percent of boomers see Social Security as the keystone of their retirement earnings, far outpacing pensions, investments and other income.
That should scare everyone. Social security is not enough money to live on in metropolitan areas, which will force retirees to move to more remote and cheaper parts of America. Where my parents live, my parents can get by on my dad's social security check. He's got the house paid for so with no mortgage payment, mom's social security check is play money. They couldn't even come close to doing that in California, the cost of living in CA is just to high.
4) "I have six kids," said Gary Marshalek, 62, of South Abington Township, Pa., who services drilling equipment and says he has repeatedly refinanced his home and dipped into his pension to pay for his children's college. His inability to afford retirement "sounds like America at the moment," Marshalek said. "Sounds like the normal instead of the abnormal."
Many boomers will ultimately live with their children as their financials leave them destitute.
5) Though the first boomers are turning 65 this year, the poll finds that 28 percent already consider themselves retired.
That's because many like my parents retired at 62. With 77 million in this generation, we will see a large part of this country enter retirement in the next several years. That's one large demographic change!
6) Excluding their homes, 24 percent of boomers say they have no retirement savings.
This is the crux of the problem. No savings and what little net worth is in the home, which generates no income for retirement. This almost ensures boomers will have to sell their home creating real estate supply in the next 5-10 years. If 24% have no savings outside of their home, how many have less than a years worth of living expenses? That has to be a big number too, and it's just a matter of when the near broke become broke and have to sell their home.
7) Despite the worries and dearth of savings cited by many, only about a third of boomers say it's likely that they'll have to make do with a more modest lifestyle once they retire. Only about 1 in 4 expect to struggle just to pay their expenses.
Denial, Denial, Denial. I still see baby boomers who are in denial all the time. My parents have friends, a married couple who have $800,000 in retirement, but at the age of 62 they are pulling out $50,000 per year to maintain a lifestyle of when they were working.
They haven't done the math, but at their current rate they are a biotech company on cash burn with no ability to go back to Wall Street for more money. It won't take long to burn this cash. If they have one large medical expense or the market goes through another 2008 sell off, their problem compounds exponentially.
What this couple and boomers every where have failed to understand is that when you do have savings, you want to wait as long as possible before you touch it. Once you touch it you begin the asset burn cycle and it's tough to stop. Ideally, you don't want to touch your savings until at least 70 years of age if you have a good amount. If you have minimal, you should wait until your 75. The reason of course is because either the husband or wife could easily live until 85-90.
Mustard Seeds for Deflation: The Deflationary Cycle Full Monty
On August 11, 2009 I wrote one of my favorite blogs: Mustard Seeds for Deflation: The Deflationary Cycle Full Monty. In that I identified my 8 risks for deflation, which among them is The Baby Boomer Switch:
6) The Baby Boomer Switch: The baby boomer switch is really the analysis of risk behind the changing spending demographics of the largest portion of the American population. And this massive segment is scheduled to hit retirement age in mass in the coming 2-5 years.
The demographics behind the boomers are not encouraging. If they stay employed because their net worth's have imploded and they can't afford to retire, that intensifies the over supply of human talent in the labor force and intensifies wage deflation.
However, when they finally do retire, their spending habits will consist of moving down in real estate, going on social security income (their incomes will decline), and they will lower their consumer spending habits and hold onto what funds they have remaining to support themselves for the remainder of their lives.
None of those traits of a retiring boomer bode well for an American economy driven by consumer sales and real estate values. In fact they are the very problems we have now, and more of the same is "No Bueno"!
It seems like the baby boomer generation is still on track to be an economic problem over the coming years because of their size and lack of wealth, The Baby Boomer Switch is a risk to deflation because at it's core, they are a major part of wage deflation.
A great deal of them will have to remain working longer in life and that will keep the work pool or supply of human talent high, which should place downward pressure on pay.
When they do hit retirement, the majority of boomers will make a lot less income once they retire. And since there are 77 million boomers, they are too big of a demographic to suffer wage deflation and not have a serious economic drag on the economy via lower consumer spending and real estate values.
Hope all is well.
J.D. Rosendahl, Rosey