The Anxiety Generation
by digby
This piece by Ron Brownstein about the over 50s captures the experience of most of my peer group pretty well. Some are doing quite well — upper 1%ers, who have comfortable nest eggs. But a whole lot of middle class working people are more like this:
But the effects of strained earnings and tanking investments are written in the near-retirees’ gloomy assessments of what their post-working years will look like. Although nearly half of today’s retirees said they had retired earlier than their parents did, fully half of those nearing retirement expect to stop working later than their parents did. More than two-fifths of near-retirees now believe they will remain in the workforce longer than they anticipated when they were younger. On average, those near retirement expect to work until 66; most of today’s retirees reported stepping down at 60. And while only one in nine retirees say they are still working, two-thirds of those nearing retirement expect to work at least somewhat after they step down from full-time employment. Nearly half of those near-retirees say they anticipate having to work out of necessity, not desire.
Eason, the Livonia real-estate appraiser, is among those worrying about what lies ahead. “Back in the old days, people had pensions coming, and they knew … they had Social Security waiting,” he says. “And now large businesses are just removing pension funds. I think, personally, it’s criminal. And all the other cuts—you put all this together in a shaker glass and what’s coming out? Not much.”
Eason acknowledges that he has been unable to do much to prepare for retirement. While his wife is contributing to a 401(k) account at her job, he has not been able to put aside much because he owns his own business as an appraiser, “and unfortunately in the last few years I haven’t been working much.” And, of course, the stock market’s decline since 2007 has buffeted his wife’s 401(k)—and he fears it will be years, maybe even decades, before it recoups the losses. As for the family home, its worth has plummeted well below the cost of their mortgage, and Eason expects a long wait there too before the losses are reversed. “Because I’m a real-estate appraiser by trade,” he says, “I watch the market in my local neighborhood. The house I live in cost $147,000, and … other houses [built in the same year by the same builder] are selling for around $75,000. So at that rate, it’ll take the rest of my life for the market to catch up and equalize.”
This over 50 crowd represents a huge part of the population: the baby boom. Only the very first vanguard are already retired. That includes about 75 million people. As I said, a good number of them are doing well. But there are many millions who have seen the bottom drop out, taking care of both kids and parents during this bust, losing years of growth in their 401ks and home equity at the worst possible time. I can attest to the fact that this group is watching the safety net fray with increasing anxiety. (This talk of making older people bargain hunt for cheap medical insurance chills my blood.)
And those are the one’s who have been able to save. A lot of others are experiencing no wage growth and increasing expenses:
Although declining 401(k) balances are a worry for some, in follow-up interviews with near-retirees, by far the larger concern was the inability to get far enough ahead of the monthly bills even to invest for retirement. Only about one-fifth of the near-retirees say they can live comfortably and put aside money to save (compared with the nearly one-third of retirees). “It’s a matter of keeping up with current obligations, which makes our saving and socking away more difficult,” Cerny says. “So that sort of extends the working life.” Robert Gagnon, a mechanic in Livermore, Maine, voiced a similar frustration. “I have a lot of confidence in my [financial] abilities…. But it’s still difficult to work and make monthly payments for everything, home and insurance, and still pay for college [for the kids] and then save for retirement on top of that,” he says. “I’m not saying I don’t save for retirement, but I’m saying that it should be more. But I’m just paying other expenses that are pretty high.”
You don’t even want to imagine what’s like to be a 55 year old looking for work in this economy. A whole lot of Americans in this age group seriously wonder if they’ll ever be able to get a real job again.
It’s hard to deal with financial reversals no matter when it happens. But I have found that there is something particularly frightening about it when you realize that you are running out of time to make it back again. That’s where a lot of baby boomers are right now.
A smart politician would assure these people that the programs they know they will need before too long are safe and secure and ensure that they will do everything necessary to protect them. There are a boatload of these folks and they will vote on this issue, I guarantee it. Personal survival has a way of focusing the mind.
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