Another Threat to Economy: Boomers Cutting Back

[RamboLiberal]

America's baby boomers—those born between 1946 and 1964—face a problem that could weigh on the economy for years to come: The longer it takes for the economy to recover, the less money they'll have to spend in retirement.

Policy makers have long worried that Americans aren't saving enough for old age. And lately, current and prospective retirees have been hit on many fronts at once: They have less money, they earn less on what they have, their houses aren't rising in value and the prospect of working longer to make up the shortfall has dimmed significantly in a lousy job market.

"We will have to learn to make do with a lot less in material things," says Gary Snodgrass, a 63-year-old health-care consultant in Placerville, Calif. The financial crisis, he says, slashed his retirement savings 40% and the value of his house by about half.

Banks, home buyers and bond issuers are all benefiting as the U.S. Federal Reserve holds short-term interest rates near zero to support a recovery. But for many of the 36 million Americans who will turn 65 over the next decade—and even for the 45 million who have another decade to go— the resulting low bond yields, combined with a volatile stock market, are making a dire retirement picture look even worse.

http://online.wsj.com/article/SB10001424052748703321004575427881929070948.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

[msongs]

1. people who save money are getting clobbered by non existant interest rates nt

[DJ13]

2. Contrary to the spin, 0% interest rates dont help the average person

It just widens the spread (increases the profit margins) on the loans banks make, except for mortgages we dont see lower rates as a result.

If anything we get charged even higher interest on most consumer loans (thanks for no rate cap Congress).

And who wants to risk buying a house at todays price even at 4.5% interest since theres no guarantee the house wont be cheaper in 6 months?

[dkf]

3. Better to have a lower house price and a higher mortgage rate.

You get to deduct mortgage interest after all and if rates drop you can refinance. High housing prices with low mortgage rates are the worst.

[dixiegrrrrl]

10. Some retirement income brackets are non-taxable, therefore have no deduction

for mortgage payments.
Refinancing a mortgage makes the loan a recourse loan, if you have to declare bankruptcy, the refinanced loan does not go away.

[KILL THE WISE ONE]

4. it would if only we could get it ..... too many of us paying 20% and up on credit cards

[ipaint]

5. 25% of baby boomers are low wage workers and have nothing but social security to "retire" on.

Another 25% have some savings but not enough too retire, and that is according to the cbo in 2004. This recession/depression will probably add another 25% to those numbers.

[Warpy]

7. Even those of us who did all the right things

like getting through school right after high school, getting the right job, living frugally and saving for retirement have found a corporate expiration date of 55 stamped on our foreheads, leaving us 7 years with no income before we're eligible for 25% lower social security checks. That means we burn through our savings, try to find a patchwork of dead end jobs to pay our bills, and face losing everything by the time we retire. 7 years is a hell of a long time to be thrown out in the cold with no income and too many of us with modest savings have found ourselves losing everything.

I tell you this as a cautionary tale for those of you who are younger than we are, that you're going to need to plan for this and more because the corporations are starting to look at anyone over 50 as a liability, not even waiting for that 55 year mark. You are simply not going to be as cost effective as a green kid right out of school.

Retiring on nothing but social security is a cruel joke and most people my age are going to have to do just that.

[Paper Roses]

9. You are right, it is a cruel joke. Trying to stretch that check

to cover anything more that house taxes, and insurance leaves little left. Meager savings gets no interest, prices of basic necessities rise daily. No cost of living increase. Where do the decision makers live that there is no increase in the cost of everything?

My computer is toast it is so old, and I can't afford a new one. On this world, it is my connection to everything. I'm trying to mooch an used one from a family member. This one, now that I updated to IE7,SP3 keeps giving me strange messages I don't understand. When I did the last updates, my PSC stopped working. Seems HP has no drivers for it with EI7..or something to that effect. Won't do some of the other updates either.

I'm told I can get a new computer for around $400.00. Well, that is great if I had $400.00 laying around and I knew what to buy.

I envy some of you younger folks for your current tech knowledge but not for what I am sure will happen to the economy in a few years. How is the average American supposed to cope with the mess we're in and keep same. What of our grandchildren?

Being 68 stinks but being younger and having to face the uncertainties of the future is worse.

[Warpy]

13. You can get a computer that works fairly reasonably, kiddo

if you don't mind eating beans and pinching your pennies until Lincoln hollers for help. There are refurbished boxes at Ubid.com and Overstock.com and you can occasionally find a gem in a $200 ballpark, or $150 if you're desperate for something that will get you online and aren't particular about how it does it. If you insist on a new machine, Tiger Direct online will get you one cheaper than a bricks and mortar store.

I'm sending this on a refurbished Dell I got for $220 when my old XP box sent its HD up in smoke and wouldn't load any of the drivers from a rescue disk when I put a new one in. My desperation box is a 1998 vintage NEC (remember them?) with Win 95 that will work barely well enough to get me online so I can find a new old computer. That thing is indestructible.

I've been a bottom feeder for years, nursing marginal equipment along with trips to the library to figure out what died and computer guts all over the living room floor.

Just be aware that there are alternatives to new e machines out there for lower cost computers. Refurbished XP machines are available and they're a bit more reasonable in cost.

[starroute]

16. There are a lot of very decent machines on Craigslist

Prices for desktops have come down surprisingly in just the last year -- apparently because everybody who can still afford it wants a laptop. I just paid $80 for a machine of roughly 2004 vintage that's significantly better than what I had before, and there are slightly older machines that are still in good shape going for less than that.

You should have a friend who knows something about computers to help you buy, and you should definitely avoid the sort of sellers who claim to offer fantastic deals and are dealing in machines of uncertain origin. But with a little bit of guidance you should be able to make out quite well.

And if none of your friends knows any more about computers than you do, see if you can borrow the 20-something offspring of a friend or relative. They love to show off their expertise.

[northernlights]

14. that's pretty much where I'm at

Forced to live off my "retirement savings" from age 48 onward. I've been out of work more than in, and low wage jobs when in. I'm looking at social security as my only way to live, and unless I'm able to find a way through this, may be forced to take that earlier rather than later.

That's the bad news. The good news is there are still places in the world where Americans can live fairly comfortably on only social security, with low cost health care insurance, a low cost of living, relatively low crime, direct deposit of your SS into local bank, and moderate climates. It helps that I'm adventurous, good at learning languages and feel less and less interest in staying here and with no family to keep me in the US.

The race is on...will I be able to sell my home in time to get free of my student loans and still be able to make it to the magic 62 with enough money to make the move? Time will tell...

[madrchsod]

6. well duh....

at 62 i`m on the eat shit and die outsourced fucked over union worker retirement plan.

my parents generation were the last to have a decent life after retiring.

[Sherman A1]

8. Two thoughts here...

One is total agreement with the above. Low interest rates and continued inflation (despite what the media tells us about deflation) do not encourage savings for retirement.

Two this group of consumers, may just be consumed out... The kids are mostly raised & gone (one hopes) and really just how many TV's, cars, new things for the home, do you need. Wal Mart might be full of cheap stuff, but I just don't need a new set of plastic organizers every week. I have everything I need for now.

Yes, I will take a vacation, I will pick up a few trinkets, I will buy a new gadget for my camera, I will buy a book now and then, go to a restaurant, I will replace a broken whatever, but I am not in the market for a new household of furniture and all sorts of new colors of window treatments.

[GTurck]

12. Oh how I agree..

I keep thinking what I could buy and use but very few things come to mind and I am not going to buy just to buy even if I have the money to do so. Which often I don't.

I would, if SS and pension were able to stretch, get better windows for the house and up-grade the wiring but that is not possible and they are not sold at WalMart.

[dixiegrrrrl]

11. Living alone does not cut it anymore for those of us in the pre/early retirement group.

Back in the 70's when I was a poor college student, sharing a house was very common, great way to stretch limited dollars.

Might be time to consider that again.

I know Mr. d and I are making it only because of our combined incomes and low living expenses.
I did buy our current retirement house with an eye towards its design for possible sharing.

[w4rma]

15. And raising the Social Security retirement age isn't going to help, any. (nt)

[glitch]

17. They found a guy to interview in Placerville? What'd they do, dial a random number? nt

:rofl: