What Baby Boomers Can Learn From Caitlyn Jenner
With war raging in the Middle East, more politicians running for President than there are citizens, the economy continuing to stumble, and Congress fiercely debating the propriety of government surveillance in the aftermath of 9/11, it’s only logical that the nation was transfixed this week by the transformation of Bruce Jenner, aka the World’s Greatest Athlete, into Caitlyn Jenner, who this blogger is man enough to admit is one attractive 65 year-old. But whereas Ms. Jenner is a shrewd business woman who knows how to convert her fame into social media fueled riches, most people born between 1946 and 1964, aka the Baby Boomers, have neither the inclination nor the prowess to pad their golden year nest eggs the way Ms. Jenner has. As a result, almost 75 million Americans are headed straight off the demographic cliff, with my generation following shortly behind them.
The statistics from a recently released Government Accountability Office study are frightening, to put it mildly. About 55 percent of households age 55-64 have less than $25,000 in retirement savings, including 41 percent who have zero. Most of the households in this age group have some other resources or benefits from a defined benefit (DB) plan, but 27 percent of this age group have neither retirement savings nor a DB plan. Furthermore, those of us who have been saving aren’t doing a very good job of it. Among the 48 percent of households age 55 and older with some retirement savings, the median amount is approximately $109,000–commensurate to an inflation-protected annuity of $405 per month at current rates for a 65-year-old.
These statistics demonstrate that the country is growing more, not less, dependent on Social Security. The problem is that the Social Security Trust Fund is already straining under the weight of these commitments. The Report points out that the Social Security Trust Fund is projected to become depleted in 2034, at which point it will only be able to provide 75% of scheduled benefits.
Readers of this blog will know that I am somewhat obsessed with prodding credit unions toward attracting younger members. But even as credit unions justifiably readjust to younger generations, there clearly is going to be a market for products that assist older workers and retired Americans to stretch their savings as far as possible. Increasingly, your member of modest means will be a Baby Boomer for whom the cost of putting kids through college on a salary that barely rose with inflation over the past 30 years has made it impossible to put aside much for her retirement. This problem was exacerbated by the decision of her company to stop providing a defined benefit plan and instead offer a defined contribution plan.
On that cheery note, have a great weekend.