Good News and Bad News on Boomer Retirement

[swag]

http://www.theunknownideal.com/2006/08/good_news_and_bad_news_on_boom.html


DailyII.com reports on a GAO study (available here as a 70 page Acrobat file) with some good news for those concerned about the stock market and with some bad news for those concerned that people aren't saving enough to retire:

Retiring baby boomers are unlikely to sink the stock market by selling off assets, mainly because they have few assets to shed, the Government Accountability Office has found. The GAO says that, unlike previous generations, which had substantial assets squirreled away for retirement, baby boomers have fewer assets. “The good news is a meltdown is unlikely,” says the GAO’s Barbara Bovbjerg. “The bad news is there is not a lot of retirement savings. Baby boomers need to think about what they’re going to retire on so the rates of return are very important.” The GAO says 5% of baby boomers account for 52% of all assets, in which case, those with massive assets most likely will “sell them slowly.”

[demnan]

1. This might be good news for me

but what about the people who should have a 401 K - this is horrible news! By the time I'm old there will be massive numbers of old people sleeping in the streets, I guess.

[swag]

2. Yeah, it's awful that there is so little saving for retirement.

Lots of people will be working for a long long time.

I have seen this happen in my own family, with family members (uncles and aunts) in their seventies working at K-Mart, etc.

Fortunately my own parents started saving very early, stowing away $25/month in savings bonds while they were in their 20s, even though their paychecks were small. The depression taught them thrift early on.

[BOSSHOG]

3. I would suggest everyone open up a Roth IRA

even if you have a potential pension or 401K. Always pay yourself first. They come in many forms, what you put in is not tax deductible but everything you withdraw is tax free.

[swag]

4. Great suggestion.

I've sent several friends to T Rowe Price for their low costs, ability to automatically invest small amounts, and their low-cost target retirement funds. A Roth IRA is very easy to open and maintain with that company.

Varying features can be found at Vanguard, Schwab, et al.

Disclosure: I have a rollover IRA at Vanguard and a Roth IRA at Schwab.

[BOSSHOG]

5. JANUS has been very good to us

over the past 15 years; I have a Janus Roth. My wife has a thrift at work and a Roth IRA at Chase. I also have three commercial bank CD Roth's. We both will have a pension and I'm 10 years away from being a social security king, lazing away on the backs of the working class. No wait, I've been pumping money into social security for 35 years now; so I guess its okay if I get some back.

PLEASE EVERYONE, YOU CAN SAVE MONEY - I KNOW YOU CAN.

As Henry Ford said in 1903 - "whether you think you can, or you can't you are right." Just think you can.

[kineneb]

10. well, unless one is on Medicaid

If we had enough income enough to save, Hubby would loose Medicaid drug coverage. I would need a $40k/yr w/benefits job to make up for that loss.

For all you who can, yes- do save.
For the rest of us, we are already screwed.
Oh, well, sigh.

[Sammy Pepys]

8. Yup.

Good advice....I'm borderline fanatical about funding mine.

[sevenleagueboots]

6. it's never too late to start all over again.....

We've all had good teacher's that offer nuggets of truth. Until events get really grim do two things.


1. Get into a cash position. Eliminate all debt.

2. Save. What saves grows has never been more true. Accumulate whatever
you think is a store of value such as cheap gold/silver coins instead. Keep no more than 6 month supply of cash.

Beware of any plan that offers a return on investment. Scoundrels abound. Neither a borrower or a lender be.

[Sammy Pepys]

7. A boomer "sell-off" wouldn't massively sink stocks anyway...

...if most folks are doing it right. By the time they get to retirement their retirement savings should mostly be in bonds and cash. As they got older, they would've slowly phased themselves out of the stock market.

Again, that's if they're doing right.

[BOSSHOG]

9. And as each year goes by

fewer baby boomers will be drawing money out and the number of people putting into social security will be increasing. An obvious cycle lost on conservative naysayers.