Boom in retirements could slow economy, Fed report predicts

[lovuian]

http://feeds.bignewsnetwork.com/redir.php?jid=e866691fb2456a04&cat=3a8a80d6f705f8cc

They sometimes have been called the most self-important generation in American history. Now, as their leading edge begins to enter retirement, we may start to find out whether the baby boomers' role in the economy is as outsized as their ranks.

If a new Federal Reserve report is correct, the lost labor of the 77 million boomers will be so hard to replace that over the next decade the national economy will grow at a significantly slower pace than it has in the past 10 years.

snip...

The new report predicting that outcome was compiled by five economists at the Federal Reserve Board of Governors. Their preliminary draft (the final version is expected in July) has been called "revolutionary" by one Wall Street economist.

Experts poring over its findings predict sweeping implications if the report proves true, affecting the course of interest rates and the level of wages. The interaction of demographics, economic choices and individual behavior raised in the report is so complex that forecasters may be studying the conclusions for some time to come.

"If it is true, it changes everything," said Ian Morris, chief U.S. economist at HSBC Securities USA in New York.

The impact of the report may have more to do with who is writing it -- economic advisers to the Fed Board of Governors -- than what they have to say.

The Fed economists presented their findings a few weeks ago at a venue where their conclusions would be sure to draw widespread attention -- the Brookings Institution, a prestigious Washington think tank. The Fed did not make the economists available for an interview.
more...
Retirement of Boomers means lots of jobs for the younger generation... and means higher wages needed to be paid by corporations!!! :rofl:

[Trillo]

1. Got a link to the report? n/t

[no_hypocrisy]

6. What makes the federal economists so sure boomers can AFFORD to

retire?

Negative savings
* spent our Social Security
Medicare being bankrupted
Job insecurity
Depreciation of real estate values
Volatile stock market
Projected inflation due to trade deficit, federal budget deficit, Fed Reserve printing money night and day, and increase in gas prices calculated into consumer goods

Yeah, the only way boomers will have golden years will be if they have gold futures == big time.

[bananas]

13. Here's a link

I found this a few weeks ago when it was first reported.
http://www.brookings.edu/es/commentary/journals/200603bpea_aaronson.pdf

That link is on this page
http://www.brookings.edu/es/commentary/journals/bpea_macro/forum/papers.htm

which is linked from here under "papers"
http://www.brookings.edu/es/commentary/journals/bpea_macro/forum/

[sandnsea]

2. Boomers spending their retirement

plus increased wages for the younger generation = bad economy. :crazy:

Only in the eyes of the greedy wall street pigs could that be interpreted as a bad economy. The horror, they're going to have to pay people instead of sucking up every last drop for themselves.

[SoCalDem]

3. BULLSHIT.. These pointy-headed geeks act as if we all emerged

from a newly discovered swamp or something. Our generation was the MOST chronicled generation EVER.. The powers that be know every cent we earned, spent or borrowed our whole lives.

They had NO problem sticking it to us in the 80's so we could "pre-pay" our own social security. They had NO problem phasing out defined benefit pensions as we climbed the corporate ladder, they had NO problem pulling the rugs out from under millions of us as they attacked and dismantled unions..they had NO problem moving jobs overseas and closing companies that we relied upon for our "peak earning years" as we prepared to 'retire'..

Sure, some of us will retire with plenty, but I have a sneaky feeling that most of that retirement will have come from what parents of boomers have left to them. Boomers are accused on not saving, but as the spending power of the dollar has not really increased since the 70's, and the costs of everything has gone up and up , is it any wonder? With few exceptions, most of us have barely kept up, and have had no "extra" to save.

I am angry that the government stole all that money from us all those years. They claim they "borrowed" it, but does anyone ever see them "repaying it"? All those years that extra money was included in a little box that said FICA..it did not say "slush fund".. The "tax cuts" for the rich were funded from the FICA surplus.. All that money that was taken out of our paychecks for DECADES, was juts handed to rich people who didn't even need it ..

The boomers are the first generation to have "long-lived" parents...lots of them..and these parents are being cared for by boomers in their 50's & 60's, often while they are also helping 20-30-something children and their families..

I have a sneaky suspicion that lots of boomers will probably just die from the stress of caring for all these people, and trying to save for their own later lives.. Maybe that's been the plan all along :(

[izzie]

4. I also wonder about the house thing

People keep saying all their saving are in their homes but what happens if the market goes down? It also seems to be a fact that no one takes into count just what they paid for that home over the years. I so often hear people say I bought this house for 50,000 and sold it for 150000, for getting that they paid int. in that money for years. So what they really paid is not in their figures. It is not so good, counting on money not in your hands.Here is some thing that happened in my own family. My father bought a house in 1937 for 6000 and it was built in 1921 for 21,000. They have gone up in places but you will still see this going on in some places. And will the market stay high until you can sell to retire?Just an added thought

[SoCalDem]

5. It scares the hell out of us, but we have always used our house as a place

to live, not an investment.. (We moved in in 1981), and we plan on leaving Calif for a cheaper state when my husband retires in a few years. Our house payment has always been less than what we could have paid in rent, so we just stayed put..

people who kept "trading up" are the ones who are in a world of hurt if the market tanks..

We lost money on two houses, so I guess we will roll the dice on this one too :(

[izzie]

12. I do hear some scary things out there on homes.

I am a renter now so I just do not have to worry but I am old so things are different for me. I can not say I really envy how the workers must do it to day. I think we had it easy in place of your age or my fathers age. Maybe the 40 years after WW2 were just to good for us.

[Gormy Cuss]

14. This quote is directed at people like us.

"They sometimes have been called the most self-important generation in American history."

You know, the spoiled brats who tried to ruin everything in the 1960s and 1970s and now dagnabbit, are going try to ruin it again.

Everything you posted is true.

[SoCalDem]

15. THEY made us "important" by reporting everything we did

and making us the target of every marketing ploy in the book. That;s why I get irritated now, when everyone acts like we just arrived, aged 60 and wanting benefits in a few years..:grr:

They cannot have it both ways.. Since 1945, everyone KNEW we were here and that eventually we would all age together..

I think some people in some rooms somewhere are shitting themselves at the realization that we are going to spend less, and actually start withdrawing those 401-ks and somewhere along the line the people behind us are just not making enough money to pony up what we have EARNED. We earned the upcoming benefits by PROVIDING for OUR elders GENEROUSLY during our working years..

The government has been playing "Jenga" with us for decades, pulling out pieces everywhere they could, and pretty soon, WE will be pulling our own pieces out. The damage doen to our economy due to lack of unions and well paying jobs across the spectrum will be totally obvious soon, and I think they are running scared now. they are trying to shame us out of our due, and blame us for even daring to expect it....

[Gormy Cuss]

17. It's like the Y2K hysteria

but with much bigger ramifications. No need to deal with the issue until there is no way to ignore it anymore.

I remember reading warnings on the boomer retirement effect on the stock market back when 401K were introduced. When was that, mid-80s? The government is fully aware of the ramifications of the boomer retirement on demands on the SS fund and the likely effect on the markets and the economy.
It's being discussed now because the stack of markers in the Social Security trust fund are about to be called.

[AnneD]

23. We are required by law

to start drawing out 401K at 72&1/2 (if memory serves). Considering the large number of Boomers that have the 401K for their retirement plans, THAT is when the shit hits the fan folks. This has been know for some time but is just now sinking in.

[mrsadm]

7. No way .... to retire!

With all the cancelled and frozen pensions, and no medical benefits for retirement.... no way are boomers going to be able to retire! I certainly won't be able to ....

[bjb]

18. We can't retire

My sixty two year old husband would love to retire from his forty year manual labor job but we can't afford the health insurance. I don't even have a pension. No early retirement for us.

[dipsydoodle]

8. Not exactly rocket science

to have figured out the ultimate outcomes of the baby boom years. Most 11 year olds could have told the HSBS economist that if you add 65 to say 1945 you'll get 2010. The first thing that lovuian's thread should tell you is to avoid HSBC at all costs.

Common sense will tell you that it's no different here in the UK. The subject has been in and out of the news for the last 10 years or so. Where Bullshit.. above refers to pre-paid social security some of you may have been trapped by the same illusion as us here. Forget the fairy tales about our health care and state pensions being free - they've been pre-paid by both the working poulation and their employers since inception of the National Health System after WW2. The illusion was that contributions related to both ourselves as individuals and also those unable to pay for whatever reason including children, pregnant women, and those mentally or physically disadvantaged. The fact was that we were and have always been paying for actual current outgoings.

The shit is now hitting the fan. The proportion of the population at or reaching retirement age is constantly increasing as must be the situation the USA.

Of course in reality all of our social security etc payments are no more than additional tax
payments and tend nowadays to be refered to as stealth tax. To the goverment tax and those payments are grouped simply as income to be used <or misused for Iraq> as they see fit.

There have been over the past few years progressive cutbacks in National Health expenditure partly to offset increased old age pensions out of the "NH pot". The fear of the current and any future UK government fear will always be disenchantment of a substantial part of the voting population i.e. those retired and I have no cause to believe that exactly the same won't apply to the USA.

[Media_Lies_Daily]

9. Right. Let's blame the NeoCon mess on the retirees.

[ColonelTom]

10. Time for the civilian workforce stop-loss program

In other words, let's privatize eliminate Social Security!

[Tight_rope]

11. Retire?.....With what money?

[gratuitous]

16. Don't come the innocent with us!

Dick Cheney said all you retirees are getting just oodles of money from selling stuff on eBay. Oodles, I tell you!

[LittleWoman]

19. Forced retirements?

How many of these retirements are 55 yr olds who have lost their jobs due to outsourcing or company takeovers or plant closings? Many of these are forced to "retire" that is take whatever they have in the company system and retire. Some will go on and apply for Social Security Disability because after years at repetitive manual work they will not be able to find another job where they have to compete with younger and stronger workers. This suits the employers just fine. Younger workers=lower pay.

[AngryAmish]

20. US younger folks better get higher paid jobs

cause the Boomers will suck us dry tax-wise. Just another example of why the Boomers are the worst thing that every happened to this planet.

[VegasWolf]

21. Yeah right! A TRILLION dollar deficit and the dollar dropping like a rock

against other major currencies. The economy is doing just dandy huh Bush you dumb fuck.

[anotherdrew]

22. didn't they predict this 40 years ago? they make 40 year predictions on SS

meaningless statement made to hear words come out of his mouth.

How in hell can they think that paying higher ewages would "slow" the economy? Idiots! Spreading the money around is the only thing that keeps the economy going. We'd match china's growth if they doubled minimum wage tomorow. We could and we should. and bust anyone paying less. If you cant' afford to pay $12 an hour for your labor, you simply do not have a functuional business model going.

[AX10]

24. Higher wages means people will have more money to spend...

and save for retirment, as well as be able to send their kids to college.

[Orsino]

25. The economy could be working just as the 'cons want it to...

...if it weren't for all those inconvenient people mucking it up.

[RawMaterials]

26. Higher wages will be their for younger people

but, it will buy less and less. thats the only way to pay off all those fixed income retiree's. they also have to kill off SS because its indexed to inflation and since inflation is how they are going to deal with this problem that cant be their to inter fear, regular pensions are not tied to inflation/nether are 401k, or ira's, or personal savings accounts.

[Vinca]

27. I don't know anyone who can afford to retire

and maybe that's a good thing. My dad retired and was dead within a couple of years. If you have a purpose in life (in our case, earning enough money to EAT), you might last longer. At least that's what I'm telling myself.