Baby boomer retirement effects on the economy

[BudAshes]

I could see there being short-term problems as the economy adjusts but long-term I don't buy into it being the end of the world. When the boomers start retiring, younger people will have access to higher-paying jobs and will start spending more.

The bigger concerns are the creative destruction associated with ongoing globalization and even the prospect that boomers will hang on to their jobs and positions of power for too long.

Also the fact that the boomers gave themselves such insane pensions that they will be fucking us for many years to come.

 

[BoberFett]

Which is it, tighten or loosen our belts?

Tighten your belt, but loosen your underwear...

 

[soundforbjt]

WHY are we spending MY tax dollars to support a bunch of old fogies that aren't spending and aren't working? I guess that's why they call them entitlements, as they all feel entitled to free money from our pockets. Just imagine the number of problems that would be solved if we just turned off the life support and allowed natural selection to take it's rightful course.

Yep, and had we done the above even further in the past, there'd be no "boomer" generation to begin with.

 

[Fern]

One thing that could be interesting is asset values. Property, stocks, etc. The boomers hold a lot of that in retirement accounts, homes, etc, and as they sell off to fund their retirement could we see assets lose serious value, prompting even faster sell-offs in a spiraling value crash? I've read opinions both ways.

Yeah, I expect devaluation in the stock market as asset allocation favors bonds etc over stock for the elderly.

Real estate? I'm not sure. Will some 2nd and 3rd homes be sold to fund retirement? Possibly. I think we could also see a substantial migration. I think it likely many will leave Northern urban areas for better weather, less crime, cheaper cost of living and 'better views' etc upon retirement. I made a conscious decision to move to my area 20 yrs ago in anticipation of this demographic and the likely migration (get here before they do in hopes they drive up the price of R/E I already own).

Strain on SS and Medicare programs. Same with various state programs assisting the elderly.

Explosion in HC business. I acknowledge the value of the HC industry in general, and as a segment of our economy. However, I feel it's mostly a drain. The vast amount of money it absorbs does not result in wealth creation, no new products boosting real wealth or productivity. No new tech benefiting everyone. The money the HC industry absorbs is 'consumed' not invested, it doesn't result in something tangible and of long lasting value like a new bridge, e.g.

I think the 'assisted living' industry will explode. Same for nursing type positions where care is rendered in the home.

There's bound to be some new business opportunities catering to these people. What are so many retirees going to do with all this spare time? Where will they spend their (retirement) money? Retirement can be boring, what form of recreation will they pursue?

We may have some political problems caused by differing policy objectives/concerns resulting from the generational divide: Elderly insisting on enhanced benefits versus the younger population's concern about the deficit or viability of SS/Medicare etc.

Fern

 

[rudder]

I bought stock in the makers of Viagra.

 

[Texashiker]

Real estate? I'm not sure. Will some 2nd and 3rd homes be sold to fund retirement? Possibly. I think we could also see a substantial migration. I think it likely many will leave Northern urban areas for better weather, less crime, cheaper cost of living and 'better views' etc upon retirement. I made a conscious decision to move to my area 20 yrs ago in anticipation of this demographic and the likely migration (get here before they do in hopes they drive up the price of R/E I already own).

Lets think a little further down the road.

Baby boomers start dying, homes are left to Generation X who already have homes.

My mom and dad are baby boomers. They have discussed their will and their wishes with my brother and I.

My brother and I own our homes, so we would probably sell mom and dads house.

Now multiple that situation by millions of families. Over the next 10 - 20 years we are looking at millions of homes being dumped on the market.

A buddy of mine I went to school with, his mom died of cancer a few years ago. When the dad remarried, he sold the home.

I think over the next few years we are going to see older people seeing their homes:

1, for the money,

2, to get the home out of their name so they can receive government benefits.

This will further repress the housing market.

Why build new homes when so many older homes are being put on the market?

If the baby boomers are smart, they will start moving property out of their name before they reach retirement age.

 

[jagec]

Effects? Bad. The Greatest Generation spawned the Worst Generation, unfortunately for the rest of us. The Boomers will do their damnest to ensure that their children and their children's children have no future for as long as they can.

 

[piasabird]

At the rate that congress spends money we will be in default soon. That assumes we just keep sailing over the fiscal cliff. A time for austerity measures and less government suppor looms ahead. If the bush tax cuts expire, so will head of household, Earned income credit, etc. Rough sailing ahead. Pay off your credit cards now. All of the big corporations are turning in missed and lower financial reports. This can only be bad for our economy and for future investments.

 

[the DRIZZLE]

You guys are aware that foreigners can buy US securities, right? If you think about the number of middle aged and young people in developing market then then it seems that there are plenty of buyers for US assets for the foreseeable future.

 

[Jhhnn]

Also the fact that the boomers gave themselves such insane pensions that they will be fucking us for many years to come.

We've supported our own seniors in the same style, put over $2.5T into the SS trusts in an effort to pay it forward. No generation prior to the Boomers has done the latter, at all. Prior to St Ronnie's promises of 1983, SS was a pay-go system, with succeeding generations supporting their seniors entirely.

We've done some stupid shit, too- we've enabled the tax rates on America's wealthiest to be reduced by a third & their share of national income to double as we voted for Ronnie &GHWB in quadrupling the national debt, again in voting for Dubya who doubled it yet again...

Now, of course, America's wealthiest are highly resistant to any sort of payback for the favor they've been shown, resistant to actually hiring Americans, resistant to taking any responsibility for the Bush years that ended up screwing over the rest of us so they could profit...

The effects of Boomers retiring? Shee-it, Sherlock, most of us are on the bosses' new retirement plan, the Republican retirement plan- it's the work 'til you drop plan... the never pay off the upside down mortgage plan, the watch your investments evaporate in Wall St's scams plan, the you can't live on SS retirement plan, and the you got nothin' else plan...

It's the financial elite's "We're sucking the country dry" plan...

Unless something is done to boost the earning power of younger people, unless the wealthiest are somehow made to relent from the current direction of increasing inequality, the whole thing will cycle ever downward for the vast majority of Americans. That 4 bedroom suburban home where Boomers raised their families won't be something younger couples can afford unless prices fall substantially, and it won't be something Boomers can afford to sell if they do, because they can't afford to pay somebody to buy it. when they're upside down. They'll live there 'til they die or default, even if they'd love to downsize.

If younger people can't get better paychecks & more job stability, they won't be able to afford to borrow, and interest rates will remain depressed because of a glut of savings by high end Boomers & others even more senior.

If we can't figure out how to create more of a high/low split, rather than winner take all, then everybody who isn't a big winner will get less and less...

 

[Fern]

You guys are aware that foreigners can buy US securities, right? If you think about the number of middle aged and young people in developing market then then it seems that there are plenty of buyers for US assets for the foreseeable future.

Which markets might those be?

From what I recall, our demographic problems are present in almost every country one might expect to be able to invest in US based securities. Europe, Japan, China etc all have the same problem.

Fast growing populations in countries of poverty, no eduction and unemployment hardly give me optimism for the future of the stock market.

Fern

 

[Engineer]

Which markets might those be?

From what I recall, our demographic problems are present in almost every country one might expect to be able to invest in US based securities. Europe, Japan, China etc all have the same problem.

Fast growing populations in countries of poverty, no eduction and unemployment hardly give me optimism for the future of the stock market.

Fern

Agree 100%. Try to talk the average Joe into moving from SS to a private account invested in this stuff and see where it gets you. At one time, I would have jumped in 100%. Now, screw that. I'll take my 2% guaranteed (or less).

 

[desy]

perhaps a growth economy built on consumerism is what is actually wrong w NA and a shift to a more sustainable economic model where we focus on quality over quantity is whats required?
If they dump rental properties I'll assume they were rented, which means the new owner collects the rent? My parents recently passed, sold their rental properties before of which my brother and sister now have rental properties they purchased from funds of the estate and I'm looking.