Aging boomer trends
Here are a couple of interesting (and troubling) posts about what aging boomers are up to. First, the LA Times reports that, as predicted, the nation’s 77 million boomers are beginning to dump their stocks as they prepare for long retirements. Just as the economy rose during the boomers’ productive years, experts are predicting a long slump as they begin to cash out:
The report’s basic premise is that stock prices “have been closely related to demographic trends in the past half century" — in other words, that baby boomers pushed up stock prices in earlier years as they hit their prime earning and saving years.
. . . .Indeed, aside from being a longer-term depressant, selling by baby boomers -– the post-War contingent born between 1946 and 1964 –- could forestall any current-day recovery in the market from the global financial crisis.
And cashing out they are, according to this article from a Fox affiliate, reporting that many retiring boomers are also retiring the idea of leaving an inheritance:
"My goal is when they carry me away in that box that my bank account is going to say zero," Willison said. "I’m going to spoil myself now."
Upending the conventional notion of parents carefully tending their financial estates to be passed down at the reading of their wills, many baby boomers say they instead plan to spend the money on themselves while they’re alive.In a survey of millionaire boomers by investment firm U.S. Trust, only 49% said it was important to leave money to their children when they die. The low rate was a big surprise for a company that for decades has advised wealthy people how to leave money to their heirs.
The article reports that many boomers feel they have pre-paid their children’s inheritance by helping them pay for college or a house. Says one boomer: "I’ve helped launch them with their education and their careers. If they can’t make it on their own now, they can never make it. I’ve done my job. Now I’m going to enjoy life."
I can’t help wonder, though, how much the boomer generation—particularly, the leaders they helped elect—contributed to the high entry costs that make it so expensive for their children today to begin new careers, or contributed to the land use regulations that make it so expensive for their children to afford the kind of housing their parents had 30 or 40 years ago.
I wish those boomers well who have earned and saved enough to enjoy a comfortable retirement. Those they leave behind have no claim on them, and the boomers have every right to enjoy their rewards. We might have liked, however, to have enjoyed more of the economic freedoms they had so that we might have a better chance at our own.
This plays in to the myth that Boomers are the Most Selfish Generation. This myth may have resonance on the macro scale but I don’t think it has a lot of relevance to anything on the micro scale.
If it’s true that Boomers are liquidating their stocks, then who is buying them? The answer is, Gen-X’ers and Gen-Y’ers, people of my generation and a few years younger, who are entering the higher-earning points of their career arcs — and they’re doing it both as individuals and through mutual funds. Where are the Boomers selling their stocks from? Mutual funds, for the most part.
As for me, I’ve grown used to the idea that I will likely not be as prosperous as my parents were despite having more education under my belt. Different eras, different opportunities. Opportunities still exist. In my case, I’ve held an advanced professional degree for more than a third of my lifetime, so at this point I really need to look to myself and not to generational economic disparities if I find myself dissatisfied with where I am economically.Report
I wouldn’t call it selfish, necessarily. Like most things, it’s the law of unintended consequences. In trying to build the Nice Society—with the intent to benefit their children, of course—boomers made a bit of a mess of things. Obviously, things are better in many ways. But the housing bubble is an embarrassing legacy the boomers will have left us.Report
… the housing bubble? what about the twenty year stock bubble? Damn reagan and his stupid ideas that only benefitted the first person in.Report
The selfish society that refuses to downsize even as pay shrunk, that preferentially chose cheaper and weaker over “good and decent”, that went for government welfare for all poor, rather than asking and getting wage increases.
Boomers were selfish, indeed. But they’ll be blamed for more than they caused. Don’t think retiring will save them.Report
opportunities still exist? 20% unemployment for current 16-25yrolds, ain’t it? And that’s the deliberately lowballed BLS stat, too. (doesn’t measure underemployment, doesn’t measure people who want full time jobs, but have part time jobs)Report
I ain’t buyin’ stocks — not long, anyhow. Too fucking dangerous. You wanna know who is buying stocks? hedge funds, and they are buying to sell out, cash out, and hollow out corporations.
75% of the stock market used to be dumb money (circa 2008). But the dumb money got slaughtered in the crash, and the smart money folks got all the winnings, and actually made a profit. Don’t think that didn’t teach ’em somethin.Report
How do you define prosperity so that you will be less prosperous?Report
And my pre-Boomer dad [b. 1932], sitting on a paid-for house and eating whatever he can squirrel up from the bargain store [frugally, not dog food], refuses to take a reverse mortgage because he wants to leave a relative pittance to his kids, who are all doing OK in their 50s.
What a fool. But that’s how they wired themselves back in the day. You love your children more than you love yourself, certainly more than your “me-first” goodtime parents of the 1920s ever loved you. Never again.
That’s probably too much auto-bio for this forum, admittedly. But it’s not really about me. We, his kids, wish the old man would squander our inheritance on himself, but we just can’t talk him into it.Report
Even if you could get him to take out the mortgage, you probably couldn’t get him to do the spending to make it worth it. But maybe you could just convince him that cash would be a better investment for you kids than a house at this point, and at least give him the option. Though presumably you’ve tried that.Report
Knowing my pre-Boomer family, he’s probably happier eating hot dogs for lunch every day and buying the cheapest toothpaste on the shelf. There’s nothing an old fart loves more than getting a deal on something.Report
Signs that I may be turning into an old fart.Report
…can’t you do a reverse payout? squander a bit of your own cash on hand on him, knowing when he finally does kick the bucket, you’ll get it back? (sorry if this sounds insensitive, it’s not meant that way)Report
Thx for the thoughtful response, MichaelD, and dearly. All of the above. The man is probably a better man than you or I, although his ambition was to raise a man better than he, like any proper father.
The funny thing is, he said that my late mother was a better man than any of us, so there’s that too.
Thank you, Michael Drew. The money part we’ve dispensed with, eh? About the rest, my eyes are aching just now. You understand.Report
Of course, Tom. I was just musing, really. It was actually a bit presumptuous of me to even do so. Best to your dad.Report
“”My goal is when they carry me away in that box that my bank account is going to say zero,” Willison said. “I’m going to spoil myself now.” Upending the conventional notion of parents carefully tending their financial estates to be passed down at the reading of their wills, many baby boomers say they instead plan to spend the money on themselves while they’re alive.”
I suppose the key to this sort of “spend it before I die” philosophy is to not live too long. I mean you wouldn’t want the money to run out and then live another 10 years in poverty. Are there companies or consultants to help people achieve the correct rate of burn?
For the record, I am technically a baby-boomer, though born toward the tail-end of that generation. My parents are still alive, so I have no experience of what children can expect to inherit. I am also still putting my children through college, which they are doing so far without loans. I am at least ten years out from retirement, and I have only vague notions of what sort of life I’d like to be living then, or what my investment portfolio might still be worth. I do know that I am a cheap person, raised by cheap people, with a wife who is much the same. I don’t think we will skimp during our retirements, but we definitely won’t try to spend everything on ourselves.Report
… people have retirement accounts? *snerk* People steal from their retirement accounts at the drop of a hat (known as any medical bill, naturally, or being unemployed)Report
People are stupid.
I have a retirement account. I also drive a ten-year-old car. I’m certainly not doing my part for Apple’s quarterly report.Report
… who are you invested in? are you long on anything? will they let you short the market, if you wanted to?
I don’t have much of a retirement account. Made more money without it.Report
The Baby Boomer generation in Japan has the exact opposite character of the Baby Boomer generation in America, even with a more robust social welfare system: stoic, cheap, unwilling to take holidays or make expensive purchases. My wife and I think it has something to do with the psychology of winning and losing WWII.
When we got back to America, it’s amazing how many Boomers suggested we take advantage of Section 8 housing, as if government services are just there for the taking. “I don’t think Section 8 is made for people like us.” I’d say. “Well, sure it is! You’ve paid for it!” they’d reply (which isn’t true since I’ve worked in Japan for my entire tax-paying life.). This cavalier attitude towards consuming public services frankly frightens me.Report
That there’s some pretty hardcore prole drift.Report
It’s common for doctors, particularly of the LDS variety (with multiple children), to accept welfare of one sort of another while they are in med school and residency and on limited income. They seem to not really have a problem with it precisely because they know, once they’re out, they will be paying into the system in a pretty big way.Report
shtetls steal from the system, and don’t seem to have a problem with it.Report
But don’t medical schools evaluate financial aid based on the student’s parents’s income no matter how old the student is?Report