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Demographic Problem?
Old 06-04-2013, 10:34 AM   #1
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Demographic Problem?

As we know the baby boomer generation is very large. Our nation will face expenditures in social security & medicare as they roll onto the rolls of this programs.

But there is another problem.
Nearly half of those nearing retirement lack adequate savings - Chicago Tribune
Quote:
About 47 percent of early baby boomers, now 56 to 62 years old, are not expected to have enough money to cover basic living expenses like food, utilities and health care through retirement.
Thus those 47% will likely work as long as possible. Which possibly results in less job openings for the succeeding generations. I say possibly as the baby boomer generation is large so perhaps there will be sufficient job openings. But if not, that creates a big problem for generation X [born 1965-1979] who counting on moving up. Particularly as they have been devastated by the recent recession.

The Great Recession wrecked Generation X- MSN Money
Quote:
This is a generation that graduated amid one recession, missed out on the dot-com bubble that preceded it, missed out on the housing boom because it couldn't scrape together enough cash and was plunged headlong into yet another recession, thanks to the housing bust that followed.

Gen X has since watched what little net worth it had plummet from an average of $75,000 in 2007 to just $42,000 in 2010.

That $33,000 loss isn't nearly as much as the nearly $75,000 lost by baby boomers born just after World War II, but at least that group is still sitting on roughly $170,000 apiece, thanks to the cash it made during the dot-com and housing booms. Pew concluded that not only did Gen X lose out during the housing bubble because of its low rate of home ownership but that "Gen Xers are the least financially secure and the most likely to experience downward mobility in retirement.”
Combine the above with the trend of job automation & Jeremy Grantham's future low 2% GDP growth for decades prediction.
GRANTHAM: Here's Why Economic Growth Is Going To Be Dismal For Decades To Come - Business Insider

Combine with Europe going into recession again & mebbe US as manufacturing drops.
Mish's Global Economic Trend Analysis: IMF Halves Germany 2013 Growth Estimate; Still Too Optimistic
Mish's Global Economic Trend Analysis: Huge Miss in May ISM; Manufacturing Now in Contraction; What the Numbers Mean

Very choppy waters ahead. Times ahead could be just as bad as the stagflation decade [~1973-1983].

Retirement is a recent phenomenon for the masses. Just for the WWII generation & looks like part of the baby boomer generation. Perhaps we are headed back to where a person works til they no longer can work & generational warfare. I dunno. My crystal ball is on the friz.

Well mebbe this post will generate some discussion on the long term macro economic trend/effects on our nation & the world.

Cheers
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Old 06-04-2013, 10:40 AM   #2
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We need to do our part and retire if we can and make room for the folks behind. I say that only semi-jokingly. If we have enough, perhaps it it time to let go. I'm working on it.

Something I don't think you mentioned which is overlaying the demographic problem is outsourcing/offshoring, which hits most of the Western countries. It is hitting my profession hard (software). It is also one reason I'm in OMY since my wage and benefits have reversed. I'm not alone. Whole manufacturing industries have been decimated. Those folks were out of work for a while or still are. The net effect is they have had to delay retirement.
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Old 06-04-2013, 11:27 AM   #3
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Just a thought....of those 47% who will continue to w*rk, I wonder how many will start businesses that hire additional workers (just thinking that a few of them must have an entrepreneurial bent). They could be like Harland Sanders, who started his first Kentucky Fried Chicken franchise at age 65.
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Old 06-04-2013, 11:42 AM   #4
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This is one of the reasons we need to spend more on infrastructure -- to make sure the bridges are safe to live under.
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Old 06-04-2013, 11:43 AM   #5
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The scenario described by the OP, if every reference mentioned were correct, would surely lead to some form of civil unrest.
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Old 06-04-2013, 11:54 AM   #6
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Quote:
Originally Posted by JoeWras View Post
We need to do our part and retire if we can and make room for the folks behind. I say that only semi-jokingly. If we have enough, perhaps it it time to let go. I'm working on it.

Something I don't think you mentioned which is overlaying the demographic problem is outsourcing/offshoring, which hits most of the Western countries. It is hitting my profession hard (software). It is also one reason I'm in OMY since my wage and benefits have reversed. I'm not alone. Whole manufacturing industries have been decimated. Those folks were out of work for a while or still are. The net effect is they have had to delay retirement.
That is the first thing our pension propaganda people put on the pensions website as a benefit of my pension system. Something like this "over 80% of all monthly dispersed monies are spent instate buying goods and services to promote a healthy state economy".
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Old 06-11-2013, 11:07 PM   #7
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Compared to ALL developed high income countries, the USA has THE BEST demographics. Sure she's hitting a rough stretch trying to digest the retirement and healthcare of the gigantic baby boom generation. I believe the USA will be fine in the near, mid-term, and long-term future.
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Old 06-12-2013, 09:16 AM   #8
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I read this when first posted.... but just reread it since it popped back up...


The one flaw in the analysis is that companies might not allow the older worker to keep working!!! This has been proven again and again by many companies... heck, it happens so much they even passed a law to try and prevent it...


It might make it harder on those 47% who want to continue to work, but nobody will give them a job....
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Old 06-12-2013, 10:40 AM   #9
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"The one flaw in the analysis is that.... nobody will give them a job...."

Most big media articles on how to fix "demographics" and retirement funding blithey ignore the access to jobs issue for people past 50, or even 40 in some industries.
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Old 06-16-2013, 10:26 AM   #10
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Another problem Gen X has: they're a small generation. When it comes time to vote on who will pay more taxes, or who will gets their benefits cut, Gen X will ALWAYS be on the short end of the policy stick because those who are older (Boomers) and younger (Millenials) vastly outnumber them. People tend to vote for the financial policies that benefit themselves and their own demographic. Because the majority rules, Gen X will lose out. They'll never be in the majority.

So not only did they lose the most, they will probably continue to lose the most.
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Old 06-16-2013, 01:24 PM   #11
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I used to think so too, but it's not really true:

http://www.indexmundi.com/graphs/pop...ramid-2012.gif

In that chart, baby boomers are 48-66 years old. While that one band (50-54) is quite wide, so is the 20-24 band. (Be sure to remember to add male to female. You'll see that with both genders included, 20-24 year olds are roughly as numerous as 50-54 year olds.) The difference is simply not the big, except for the 35-39 year olds, which are indeed a smaller group.
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Old 06-16-2013, 01:56 PM   #12
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As a pre-boomer I expect my future federal income tax to increase for the sole reason that many fellow boomers have not allocated enough to live on in old age and I will be expected to pick up the tab for their lack of preparation.

I'm not budgeting for it but I expect it.
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