I just read this article on MSNBC entitled "Baby Boomers facing retirements in jeopardy" and that's about all you need to know. Basically, the two great American dreams (1) the eternal rise of housing prices and (2) the eternal and reliable increase in the stock market both dropped off the end at precisely the same time that baby boomers are going to retire... 10,000 per day for 19 years. That's a lot of people. If you consider the S&P is up about 4% for the decade and we don't even need to discuss what your house might be worth... AND you combine that with a drop in the savings rate of about 10% in the 70s and 80s to -1% in the last decade... well... it's not good news for anyone.
As a 35 year old male hitting what is supposed to be the prime of my income potential... and someone with a higher than average savings rate, it's very concerning. My generation has less children and may have to support a lot of people who are completely unprepared for retirement. People with little or no assets... people with children with little or no assets... people who vote. If I were a betting person I would predict that large tax hikes are on the way... and they are NOT going to go to infrastructure improvements or for the benefit of education... or defense or paying down the debt for that matter.
The fact is we spent the last 30 years living WAY above our means and now we're going to spend the next 30 living below our means just to stay even with the huge debt we are carrying around. I don't see budget surplusses and decreases in the national debt anytime soon.
I'm not really interested in the blame game. Should people have saved more? Yes. Should we have exercised fiscal discipline? Yes. Does knowing this now change the past? No.
So what to do? I think we just have to prepare to pay the price. We're going to have less money... maybe a lot less. People are ultimately going to vote in self-serving ways... even to their own pain. If you're 63 years old, can't get a job in the 10%+ unemployment economy, can't retrain your skills in time for it to matter, have massive debt and medical costs and your only way to survive is social security... guess what you're political platform is? If you're a politician who needs votes to get elected, guess what your most important issue has just become?
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