America’s 60-Year-Olds Are Staring at Financial Peril

[joestein]

The hardest thing for people to do is to "down size" their lifestyles. . .

Is it really? Most people when they retire and/or become empty nesters downsize. Usually that involves no more mortage payments and lower taxes. Plus, if they move into a 55+, they dont have to worry about paying for taking care of their property. The HOA usually handles that.

I think close to 50% of the money that I live on goes towards mortgage, taxes and insurance. When I retire, I will certainly not have a mortgage and I am sure I will not have crazy NJ RE Taxes. Plus I am sure total insurance will go down.

Not to mention, once retired - I am no longer saving for retirement.

 

[HitchHiker71]

Do gen x er's save or spend ? The younger people I know spend a lot on things like coffee, vehicles and entertainment. Many boomers are content with regular drip coffee, an old vehicle and cheap entertainment.

Bill

I'd say these types of observations apply equally to Boomers vs GenX'ers - perhaps your label may apply a bit more toward Millennials or Gen Z'ers that grew up with the niceties you're referring to - that were - somewhat ironically - largely funded by their Boomer parents and grandparents during their children's formative years - since the Boomers hold the vast majority of collective wealth in the USA at this point in time - though this is expected to change as the Boomers age out and that wealth transfers down to the GenX/Millennial/Gen Z generations.

 

[Ralph Sir Edward]

Is it really? Most people when they retire and/or become empty nesters downsize. Usually that involves no more mortage payments and lower taxes. Plus, if they move into a 55+, they dont have to worry about paying for taking care of their property. The HOA usually handles that.

I think close to 50% of the money that I live on goes towards mortgage, taxes and insurance. When I retire, I will certainly not have a mortgage and I am sure I will not have crazy NJ RE Taxes. Plus I am sure total insurance will go down.

Not to mention, once retired - I am no longer saving for retirement.

Not trying to be crabby, but downsizing also included thing like travel and entertainment expenses. They tend to go up with retirement

 

[rickandcindy23]

My sister and her husband saved $2 million for retirement. They retired a little early, not by much. I think my sister retired 2 years ago, she was about 62.

 

[dazzlingheart]

 

[Timeshare Von]

In the end, it's about the question - Capital versus Cashflow. For retirement, substituting capital for cashflow OUT is the better course (up to a point). On the other hand you have the need of cashflow IN when retired, as you have no other way of earning cashflow.

Example, paying off a mortgage reduces your capital (effectively, it strands your capital in an asset you can't sell without replacing with another), but it reduces your cashflow needs (no mortgage payments). Reducing cashflow OUT.

OTOH, having assets that produce net income in allows you use the cashflow IN, to pay for your lifestyle in retirement, while still owning the assets. If you depend on selling assets to generate cashflow, 1.) you don't have that assets any more (you are getting poorer). and 2.) You don't know what price those assets will fetch when you actually need to sell them.

Planning and executing this juggle is what retirement planning is all about.

WOW that makes my head hurt trying to wrap my thoughts around it. That said, I'm happy that my cash flow IN (my SS check, less Medicare) is more than my part-time pay has been on a monthly basis for the past 18 months . . . AND we haven't had to dip into any savings (liquid accounts or IRAs) over this same period. BONUS . . . my hubby will start collecting SS in 2026, at roughly 1/2 of my monthly amount . . . which will feel like a bonus . . . and get us to a take home income (cash flow) of roughly what I was earning when working full-time in 2021 and before.

I sincerely feel as though our IRAs will be mostly for travel, vacation and a new car (when mine dies). Planning for our RMDs is real . . . but not going to have to take them for a few more years yet (like 2030).

 

[easyrider]

I'd say these types of observations apply equally to Boomers vs GenX'ers

Maybe I'm looking at this wrong but gen x er's seem to be about the same as boomers with the exception of being similar to millennial's regarding entitlement, lol.

Bill

 

[Ralph Sir Edward]

WOW that makes my head hurt trying to wrap my thoughts around it. That said, I'm happy that my cash flow IN (my SS check, less Medicare) is more than my part-time pay has been on a monthly basis for the past 18 months . . . AND we haven't had to dip into any savings (liquid accounts or IRAs) over this same period. BONUS . . . my hubby will start collecting SS in 2026, at roughly 1/2 of my monthly amount . . . which will feel like a bonus . . . and get us to a take home income (cash flow) of roughly what I was earning when working full-time in 2021 and before.

I sincerely feel as though our IRAs will be mostly for travel, vacation and a new car (when mine dies). Planning for our RMDs is real . . . but not going to have to take them for a few more years yet (like 2030).

My apologies, I'm not the most eloquent person. No headache was intended. . .

 

[Timeshare Von]

My apologies, I'm not the most eloquent person. No headache was intended. . .

No worries . . . it's just such a complex subject

 

[HitchHiker71]

Maybe I'm looking at this wrong but gen x er's seem to be about the same as boomers with the exception of being similar to millennial's regarding entitlement, lol.

Bill

Sure, because the moralist Boomers don't have lifetime entitlements like pensions and SSI, as compared to us self-centered future generations left to fend for ourselves while funding your generation's current entitlements, which the Boomers take for granted. I wonder exactly which generation it is that is really entitled? It's also worth noting that these corporations that have stripped these employment benefits for future generations, as well as the vast majority of our elected representatives in government executive branches and legislatures, are from the moralist Boomer generation (by far) - the ones that have voted for their own benefits by spending trillions of dollars in deficit public funding, effectively stealing from the future generations incomes while stripping us of things like pensions and SSI, all to continue to fund their own retirement lifestyles.

 

[easyrider]

Sure, because the moralist Boomers don't have lifetime entitlements like pensions and SSI, as compared to us self-centered future generations left to fend for ourselves while funding your generation's current entitlements, which the Boomers take for granted. I wonder exactly which generation it is that is really entitled? It's also worth noting that these corporations that have stripped these employment benefits for future generations, as well as the vast majority of our elected representatives in government executive branches and legislatures, are from the moralist Boomer generation (by far) - the ones that have voted for their own benefits by spending trillions of dollars in deficit public funding, effectively stealing from the future generations incomes while stripping us of things like pensions and SSI, all to continue to fund their own retirement lifestyles.

You forgot to put a smiley face at the end of your rant, lol.

Bill

 

[rickandcindy23]

Sure, because the moralist Boomers don't have lifetime entitlements like pensions and SSI, as compared to us self-centered future generations left to fend for ourselves while funding your generation's current entitlements, which the Boomers take for granted. I wonder exactly which generation it is that is really entitled? It's also worth noting that these corporations that have stripped these employment benefits for future generations, as well as the vast majority of our elected representatives in government executive branches and legislatures, are from the moralist Boomer generation (by far) - the ones that have voted for their own benefits by spending trillions of dollars in deficit public funding, effectively stealing from the future generations incomes while stripping us of things like pensions and SSI, all to continue to fund their own retirement lifestyles.

What?

 

[RENTER]

Sorry I do not agree. They have opportunities I could only dream of when I was their age. Starting with
1. commission free trades
2. fractional shares
3. ETF's
4. Inheritances that I will never receive.

if they choose to spend money on Taylor Swift tickets, designation weddings, weekend birthday/bridal parties or attending expensive sporting events, I cannot feel sorry for them.

I for one did not want a pension and wanted to get out of social security. I could and have done better. Hell, if you have seen the arguments. I have said no to 401K plans because I could and have done better.

 

[HitchHiker71]

What?

Please feel free to dispute anything I wrote as anything but accurate. Boomers run the vast majority of corporations, both large and small, and it was under Boomer leadership that these benefits have gradually been stripped away over the past couple of decades (though in fairness the Silent generation shares some blame of course. Same with government expenditures - massive deficit spending - most all of which occurred under Boomer leadership. It is the future generations, my generation included, that will be left to clean up the messes made over the past several decades of irresponsible leadership masked in moral superiority. Go read Generations and The Fourth Turning for a generational analysis of modern history - that's where these concepts are detailed out.

 

[HitchHiker71]

You forgot to put a smiley face at the end of your rant, lol.

Bill

 

[Brett]

Sure, because the moralist Boomers don't have lifetime entitlements like pensions and SSI, as compared to us self-centered future generations left to fend for ourselves while funding your generation's current entitlements, which the Boomers take for granted. I wonder exactly which generation it is that is really entitled? It's also worth noting that these corporations that have stripped these employment benefits for future generations, as well as the vast majority of our elected representatives in government executive branches and legislatures, are from the moralist Boomer generation (by far) - the ones that have voted for their own benefits by spending trillions of dollars in deficit public funding, effectively stealing from the future generations incomes while stripping us of things like pensions and SSI, all to continue to fund their own retirement lifestyles.

yeah, you forgot the satire emoji

Corporate pensions started changing and disappearing in the 1960's - 70's -- the Fortune 500 "leaders" then were not "boomers".

But I'm guessing you're a millennial

my millennial children are going to inherit their entitlements ....

 

[oceanlane96]

yeah, you forgot the satire emoji

Corporate pensions started changing and disappearing in the 1960's - 70's -- the Fortune 500 "leaders" then were not "boomers".

But I'm guessing you're a millennial

View attachment 96773


my millennial children are going to inherit their entitlements ....

Everything has gone up exponentially - take college tuition. In 1978, tuition at the University of Tennessee was $165 and minimum wage was $2.65/hour. In 2024, tuition is $6,742 and minimum wage is $12/hour - it would take roughly 2 weeks of work in 1978 to cover your tuition - but it would take 14 weeks of work for the same thing in 2024.

Home-buying, with the advent of private equity, has also been made extremely challenging as well. In 1986, the average home in Tennessee was $60,136 and in 2024 it's $365,000. Based on the median incomes at the time ($18,000 in 1986 and $59,000 in 2024) - home buying power has been cut in half.

The world we're facing is entirely different than that of boomers - I don't know anyone my age who isn't working multiple jobs and the majority of us are forced to rent because we can't afford home prices. I work a union job and have a pension - incredibly rare - and we still can't afford to own a home.

As a millennial - I think the idea that we are "entitled" is a bit skewed. Especially considering it had to be ... the generations before us giving us those participation trophies growing up

 

[Passepartout]

I think the above arguments are funny as hell coming from a bunch of timeshare buyers.

 

[Ralph Sir Edward]

Please feel free to dispute anything I wrote as anything but accurate. Boomers run the vast majority of corporations, both large and small, and it was under Boomer leadership that these benefits have gradually been stripped away over the past couple of decades (though in fairness the Silent generation shares some blame of course. Same with government expenditures - massive deficit spending - most all of which occurred under Boomer leadership. It is the future generations, my generation included, that will be left to clean up the messes made over the past several decades of irresponsible leadership masked in moral superiority. Go read Generations and The Fourth Turning for a generational analysis of modern history - that's where these concepts are detailed out.

You might also read Spengler's Decline of The West . There are bigger cycles than the Turning cycles.

P.S. Spengler is a very difficult writer to assimilate. They were written initially in 1913, published in 1918 (in German).

 

[jp10558]

I'm not going to get political - but I do think retirement savings to a reasonable amount is a good idea. Worst case, you find out you didn't need it and can do more fun stuff or leave it to relatives, best case you're very prepared and not screwed if a defined benefit goes away. (AKA Social Security).

That all said, I keep seeing personal rates of return very low, so IDK how people are getting an average of 8%, so it's comforting to me to know that if I only get what I expect to put in, I'll be "OK".

 

[Brett]

Everything has gone up exponentially - take college tuition. In 1978, tuition at the University of Tennessee was $165 and minimum wage was $2.65/hour. In 2024, tuition is $6,742 and minimum wage is $12/hour - it would take roughly 2 weeks of work in 1978 to cover your tuition - but it would take 14 weeks of work for the same thing in 2024.

Home-buying, with the advent of private equity, has also been made extremely challenging as well. In 1986, the average home in Tennessee was $60,136 and in 2024 it's $365,000. Based on the median incomes at the time ($18,000 in 1986 and $59,000 in 2024) - home buying power has been cut in half.

The world we're facing is entirely different than that of boomers - I don't know anyone my age who isn't working multiple jobs and the majority of us are forced to rent because we can't afford home prices. I work a union job and have a pension - incredibly rare - and we still can't afford to own a home.

As a millennial - I think the idea that we are "entitled" is a bit skewed. Especially considering it had to be ... the generations before us giving us those participation trophies growing up

My comments were more about changing corporate pensions and then corporate pensions disappearing

I remember buying a house and people saying congrats on getting a 10% mortgage rate !

.

 

[joestein]

Not trying to be crabby, but downsizing also included thing like travel and entertainment expenses. They tend to go up with retirement

Very true. However, travel and entertainment are not necessities. Personally, when I retire, I expect to spend about the same amount on living that I do know - including T & E. My funds will just be going to different things.

Now... I am not expecting to earn the same amount - but an awful lot that goes toward 401K funding and income taxes - plus I save a significant portion of my take home pay. I expect to have more than enough money to match my income - not including the current savings.

 

[rickandcindy23]

@Brett We had 10.5% in 1979, and that was considered great at the time. It was an FHA loan. About six years later, we refinanced at 8.75% and thought we were really in the money. We financed again at 4.75% and paid it off in big chunks. I was paying $3,000 over our payment toward principal. Paid it off really quickly that way.

We barely made ends meet as a young couple with 3 kids. When the kids graduated from high school (two didn't finish college but are as successful as our college grad), we started saving bigtime for retirement. We didn't even start saving until about 1999. Our pastor works for Primerica and he helped us with a Roth.

After we paid off our house, we socked money away as best we could. We didn't take many vacations really until 2005, and then I found TUG. When we used our CO timeshares, we didn't fly anywhere, we packed the car and drove.

Rick does have a pension. Yes, the Denver Fire Department does have a pension, and the old hire pension from 1970's is way better than the current pension. Way better than my SS, which is not great, since I stayed home with my kids and went to school later on in life and didn't start working until my youngest was 12.

@HitchHiker71 the books you read probably have books to counter your opinions.

 

[WaikikiFirst]

Corporate pensions started changing and disappearing in the 1960's - 70's -- the Fortune 500 "leaders" then were not "boomers".

I fell into this and wondered how long it would take someone to point that out. But, who doesn't love a good rant? Especially when it is so ill-informed.

 

[WaikikiFirst]

As a millennial - I think the idea that we are "entitled" is a bit skewed. Especially considering it had to be ... the generations before us giving us those participation trophies growing up

Have anothe one