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Why Baby Boomers Will Have a Troubled Retirement

Amongst people under the age of 35 in America, a predominant view that I see emerging is how the Baby Boom generation in the US (born 1946-64) is consuming the future of the younger generation in an attempt to finance an opulent retirement.  While this may indeed be the political goal of at least some Boomers and the core mission of many retiree organizations, the fiscal situation in the US is far worse for the Boomers than they realize, even for those who don't seek to extract from younger people.

Boomers and Entitlements. While the first Baby Boomer turned 65 in 2011, the median Boomer (born in 1955) turns 65 in 2020, and the last ones turn 65 in 2029, which indicates that their big harvesting of Social Security and Medicare from the government has not even begun yet.  Given rising life expectancies. the peak years of Boomer harvesting will be 2015-2035 or so, which means that a huge level of withdrawals are anticipated for this 20-year window.  

But alas, someone got to the goodies first.  This chart from Carpe Diem shows how US Federal Debt went from 65%  of GDP in 2008 to almost 100% today.  That 35-point rise was supposed to be consumed by Boomers seeking to finance their retirement, but now, with debt already so high well before Boomers can get their, the future payouts to Boomers have been crowded out.  There is certainly no room for another 35-point rise in Federal Debt as a percentage of GDP (credit downgrades and a capital exodus would happen long before debt could ever reach 135% of GDP), and given that the big debt spike began in 2009, it appears that President Obama and the Democrat Senate have already expended the funds that were supposed to sustain the Boomers.  

As debt thresholds that were not meant to be reached until many Boomers were well into their retirement have been pierced ahead of schedule, the squeeze will cause some very ugly intra-Boomer conflicts as each group seeks to secure a portion of the diminished pie, which we will examine later in the article.  

Boomers and Home Equity : But it gets worse for the Boomers, even for those who have resources that makes them less dependent on Social Security.  The housing market has been in a slump (which I predicted at the very height of the boom in April 2006 ), and this will, at best, tread water for the next several years.  Ultra-low mortgage rates have merely arrested a further decline, and even that deep well has been fully consumed (chart from Calculated Risk. click to enlarge).  

While some Baby Boomers believe they still may have enough time to recoup substantial home equity with which they may seek to finance a portion of their retirement, in order to retain their equity, they need a steady flow of first-time buyers to enter the housing market,in numbers greater than the rate at which retiring Boomers want to sell.  

Who are these new first-time buyers?  Why, the endless supply of young people starting their careers and forming families, of course.  But alas; the many members of this generation, born after 1990, will not be in any position to buy the houses that Boomers are seeking to sell.  

To cultivate a new generation of home buyers who can take on a mortgage, it is imperative that they do not already have a mortgage-sized debt before that.  But the higher education industry got to this generation before the mortgage industry could, and many members of this generation have already signed away the first several years of their earnings to servicing their student loans in a rapidly inflating bubble (chart from The Atlantic. click to enlarge), amounting to some $867 Billion in indebtedness  that is yet to abate.  It may be unfortunate that this upcoming generation was unavoidably destined to take on debt, and that it was only a question of whether the student loan industry or the mortgage industry yoked them in first.  But it appears that student loans won the race to reach their prey, which is bad news for Boomers seeking to sell their homes in 2015-20.  

On top of the student loan burden postponing their home purchases, there are more sinister cultural forces that are moving this upcoming generation towards apartments and condos, and away from the single-family homes that Boomers will seek to sell.  The US legal system severely disincentivizes young men from family formation  by subjecting them to preposterously unfair laws if they enter a modern marital contract, and while those who profit from this status quo have done their best to conceal the risks of marriage and family

from young men, the anti-misandry sphere continues to expose the truth, particularly to these younger generations of men.  Fewer young men are willing to take on the risk of entering such a lopsided contract.  

In desperation, Boomers will turn to the last remaining source of new blood - skilled immigration.  Skilled immigrants not only do not have student debt to the degree that American youths do, but are usually from countries that have not been ravaged by misandry.  I am strongly in favor of increasing skilled, legal immigration  and will go so far as to say America cannot prosper without it, but even here, Boomers are behind the curve, as by the time this bright idea gets favored, a new generation of skilled foreigners will be far less interested in coming to America than their predecessors in the 1990s and 2000s.  The opportunities in India and China are much more than they were in the 1990s when America could attract the very best and brightest in the world.  But by 2015, the immigrants America can attract will be diminished in quality and number.  So financing their retirements on the backs of skilled immigrants as a substitute for a generation of Americans disincentivized from family formation is a scheme the Boomers will find to be too little, too late.  

If selling their homes at a price that retains some of their home equity was important Baby Boomers, they should have pre-emptively blocked laws that would greatly inhibit family formation and the resultant purchases of single-family homes, among the next generation of Americans.  Boomers let this tragedy happen right in front of them, and will pay for it with their home equity.  

All Boomers Are Not Equal  : Lest you think I am being harsh to Baby Boomers, there is another level of scrutiny here that cannot be exposed often enough.  As I have established elsewhere, 70-80% of all government spending is a transfer from men to women. a default state almost every democracy will revert to over time, and this is especially true of entitlement programs.  Since women live 5-7 years longer than men, their average post-65 lifespan is thus about twice as long as a man's.  Add to this the fact that women use more healthcare per year than men anyway. and we get the heavily unidirectional transfer from men to women that is Medicare.  

As it has become apparent that SS and Medicare are not sufficiently funded to meet the needs of Boomers, many women (in the NYT, no less) are openly rooting for men to die early so that they don't consume the funds that would otherwise be collected by women (nevermind that the taxes paid into the system were mostly from men).  Expect this demand that men die when it is financially optimal for women to become increasingly frequent and shameless.  If women are wondering why more and more men don't see the need to 'respect women', they should contemplate their own contribution to how it has become atypical for men to be treated as human beings, rather than as disposable commodities.  

This is, of course, an opportunity for Boomer men to finally fight back.  When it is considered acceptable for the mainstream media to say the lives of men are a burden when they have outlived their earning years, and Obamacare, with the power to ration healthcare along political lines, is already prepared to fund women's health at the expense of men's, don't think for a minute that the legislative bias will stop there.  An additional surtax on men only, greater defunding of male health procedures, etc. are all being discussed.  Perhaps this will finally be enough to provoke a reaction from men.  

Conclusion : Overall, the fiscal cliff and non-cooperation of younger Americans and immigrants will bring great calamity to any Baby Boomers with a net worth under $2 Million.  Only the Boomers wealthy enough to not be dependent on either entitlement programs or home equity will go unscathed, and, unless Boomer men start fighting for their rights, they will find that an entire apparatus has been built to minimize their access Social Security and Medicare that they have paid into.  At the same time, despite an organized attempt to disenfranchise men, Boomer women will just not be able to extract more than they are already getting, since even the deepest wells of funding will be exhausted given the unprecedented number of women seeking to live off of the state.  While the excess spending has been the work of Democrats, do not think for one minute that Republicans will cut spending even if they win every election they stand in.  

Perhaps this event will be necessary in the process of dismantling many archaic and unjust structures.

Category: Bank

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