A recent opinion piece in the LA Times does an excellent job of separating fact from fiction in analyzing the notion that greedy baby boomers are poised to bankrupt the country. Supposedly, we are mostly wealthy boomers making it grossly unfair for us to receive Social Security and Medicare benefits when we retire. Not so fast, says the op-ed writer.
According to a report by the Center for Economic and Policy Research, a liberal Washington think tank, households headed by boomers between the ages of 55 and 65 lost about half of their wealth between 2004 and 2009 as a result of the real estate collapse and the shrinkage of 401(k) retirement accounts
(Source) This was a boomer calamity of the highest order because we do not have enough working years remaining to recover this lost wealth. Many boomers who lost jobs in the recession were forced to “retire” at 62 just to keep food on the table.
Retirement plans – such as the 401(k) – were supposed to be the retirement income salvation for boomers but that is not the case. Only 1/2 of working Americans even have access to tax-deferred retirement plans and the average pre-crash value of those was only $45,500. That won’t be much help.
Old folks just don’t have much income – period. Consider this from the same article:
The archetype of the greedy geezer is based partly on a misconception about today’s oldest Americans: the World War II generation. The frequently repeated statistic that 75% of all assets are owned by people over 65 is utterly misleading, because those assets are held in a minority of very rich hands. Nearly half of older Americans receive no income — none — from assets such as stocks and savings accounts. Of those who do, half receive less than $2,000 a year. Three-fourths of those over 65, according to a report by the nonpartisan Congressional Research Service, have annual incomes, including Social Security, of less than $34,000.
Will there be baby boomers who receive Social Security and Medicare benefits who don’t need them? Sure – but not many.
How ironic that when polled during the debate over healthcare reform, two-thirds of the over-65 generation opposed it – even though almost all of them were receiving it themselves from Medicare. Hypocrisy in action.
Boomers have made a lot of borrow-and-spend mistakes but we are not alone. We should not be punished as a generation based on the myth that we are all sitting on gigantic retirement nest eggs.
Here is the link to the full op-ed piece – a must read: Social Security, Medicare and the nest-egg myth