17 May 2013 Hope for Baby Boomers
For the next 19 years, 10,000 baby boomers a day turn 65 – the traditional age to retire. Not surprisingly, many are asking questions like: If we left our salary, have we saved enough to see us through? Is there enough time to make up the difference? What is that difference, or how much is enough?
For better and for worse, we boomers have created tectonic disruptions in America’s economy ever since the booms of WWII were silenced. The hard-fought peace allowed our parents the time and freedom to engage in infinitely more pleasant pursuits.
From our very beginning boomers changed the social, economic, and geographic landscape of America. Dr. Spock changed the way babies were nurtured. Hundreds of new schools were built. Expansive new highways, motor lodges, and campgrounds were built to accommodate the ‘family vacation.’
Elvis and the Beetles took control of music from a controlling establishment, allowing radical new forms of expression. An emboldened youth began to blatantly challenge traditional views of American culture, including their direct opposition to military and government policy in Vietnam.
As the first American generation to be systematically racially integrated; boomers learned civil rights up close and personal, in school classrooms, hallways, cafeterias, and football fields. The process was anything but peaceful, but boomers worked it out.
When boomers moved into young adulthood in the mid to late 70’s and began setting up households with the gusto of Woodstock and anti-war rallies they hardly recognized they were becoming just like their establishment parents, just on a much larger scale.
In fact, their acquisitions were on a scale the economy was scarcely ready for. Demand for houses, cars, furniture, strollers, and golf clubs far outstripped supply on all fronts and sent prices through the roof as producers failed to keep up, sending prices through the roof. Double-digit inflation reigned for years and market volatility was ferocious. There were six stock market corrections from 1970 to 1987 (-36%, -48%, -19%, -17%, -27% and -34%). In 1987 the decade-long inflation cycle succumbed to Paul Volker’s heavy Fed hammer in 1987 with a stock market crash on October 19, 1987.
There were many more notable booms created by this generation, including the microprocessor, the personal computer, the World Wide Web, the information technology/dot com crash of 2000, the iPhone, the financial crash of 2008 and 2009, and most recently an unprecedented 10,000 boomers a day nearing retirement creating all kinds of demands and opportunities.
The parents of the Baby Boomer generation have been called the ‘Greatest Generation.’ They endured hardships from their beginnings. They grew up in the Great Depression only to be thrust headlong into a global war to fight what is generally regarded as the greatest threat of evil so far to challenge our world. This generation endured and accomplished much for America.
Their children are the Boomer Generation. Exactly how this generation enters history remains a work in progress. It is too early to cast this American demographic group with description yet. While historians will certainly wrestle with descriptors that represent certain periods of their development like; Information Age, Iconoclastic, Rebellious, Woodstock, and Inventive, there is one descriptor that spans most of their reign – EXCESS.
From the beginning, this generation has stretched the limits of our economy and perhaps, for the first time in many of their lives, the limits of their own confidence. Too many boomers have spent when they should have saved, borrowed when there was not enough to spend, and until 2000, lived with a false confidence that few want to admit stems from a sense of entitlement that has been woven into their character since early childhood.
So boomers are now asking ‘will we have enough to see us through?’ Without pensions to lean on like their parents, we have relied on expensive 401Ks to fund our retirements. After expenses, they have experienced essentially flat returns as the S&P 500 has seen only 4% return since the beginning of 2000. If they hoped their homes would boost their savings, many are disappointed by 30% declines in value and hugely diminished demand for large homes. And finally, it is becoming apparent that the government and the younger generation will not be fully capable of making up the slack in boomers’ savings.
Once again, boomers have the chance to change the status quo. What if they rise to the occasion as they have done so well in their better moments during the past 65 years to change the course of America for the better?
What if boomers approached the question of enough, not so much from a supply perspective – as in dollars, but more from a demand perspective – as in lifestyle. What if boomers shed their excess to adopt something closer to their original mantra of peace, love and tie-dye (i.e. simplicity)? What if the focus was less on accumulation and more on adopting a lifestyle that finds satisfaction in ‘enough’ rather than an endless pursuit for more, bigger, better, faster and latest – 3.0 4.0 4.5?
If the status quo is accumulation and consumption, then the antithesis is contentment. But contentment in America is all but impossible without significant intentionality. We live in the most advanced marketing, seductively manipulative, media-rich laboratory on the planet. As we willingly submit to cultural excesses, we find it increasingly difficult, if not impossible to distinguish need from want, sufficiency from excess, discretionary from non-discretionary, or contentment from amassing.
As boomers approach their golden years, they will undoubtedly challenge the status quo of retirement as they have so many other aspects of American life. Some will work until they drop because they love it. Others will feel compelled to work so they can continue their unaltered lifestyles. If our economy fails to grow much faster than today, both of these scenarios make it tough for younger talent to advance.
But the cream of the boomer generation will find serenity and significance in their ‘retirement’ years working harder and more passionately than they ever have. But they will no longer be gathering as before, rather they will be scattering like never before. They will pour themselves into an economy and culture that dearly needs them, sharing their wealth, financial and human. They will scatter their vast knowledge, experience, wisdom, and wealth, beyond company borders, with a younger, talented, and eager generation. They will give this economy a boom no economist ever saw coming.