Baby Boomers face retirement bust

Laid off. Forced to take lower-paying jobs. Still holding mortgages, which may be underwater. Stocks and 401(k)s that tanked in the recession. Some serious stuff.

That and more that the newly-retiring start of the Baby Boomer aging wave is all listed here.

• Mortgage Debt. Nearly two in three people age 55 to 64 had a mortgage in 2007, with a median debt of $85,000.

• Social Security. Nearly 3 out of 4 people file to claim Social Security benefits as soon as they're eligible at age 62. That locks them in at a much lower amount than they would get if they waited.

The monthly checks are about 25 percent less if you retire at 62 instead of full retirement age, which is 66 for those born from 1943 to 1954. If you wait until 70, your check can be 75 to 80 percent more than at 62. So, a boomer who claimed a $1,200 monthly benefit in 2008 at age 62 could have received about $2,000 by holding off until 70.

• Medical Costs. Health care expenses are soaring, and the availability of retiree benefits is declining.

"People cannot fathom how much money will be needed to simply cover out-of-pocket medical care costs," says Mitchell of the University of Pennsylvania.

A 55-year-old man with typical drug expenses needs to have about $187,000 just to cover future medical costs. That's if he wants to be 90 percent certain to have enough money to supplement Medicare coverage in retirement, the EBRI said. Because of greater longevity, a 65-year-old woman would need even more to cover her health insurance premiums and out-of-pocket health expenses: an estimated $213,000.

• Employment. Boomers both need and want to work longer than previous generations. But unemployment is near 10 percent, and many have lost their jobs.

First, how much of this is the boomers' fault? I'd say a fair amount, beyond the obvious of boomers, as one admitted in the story, not saving enough, at least in a certain subsegment of boomers who thought they could "have it all."

How many boomers actually believed the pre-phrase-invention "ownership society" of how great 401s would be? How many one-time 1960s radicals willingly voted for Reagan? Or more? Of course, many of the people "selling" the ownership society under Shrub were also boomers.

How many have been unrealistic about the whole aging and self-discipline processes? How many still are?

A LOT:

Many seem to view their plight through rose-colored granny glasses. An AARP survey last month of boomers turning 65 next year found that they worry no more about money than they did at age 60 — before the recession or the collapse of home prices. But in an acknowledgment of reality, 40 percent said they plan to work "until I drop."

As someone technically a boomer by demographics, but really more a Gen-Xer in more ways, by outlook on life (except not so politically conservative as the average Xer) I don't feel a lot of sympathy for the average retiring boomer, in the abstract.

I don't want to be too harsh, but it gets back to that "have it all" phrase, even more than rose-colored glasses in general. And, not just "have it all," but have it all relatively effortlessly.

A rewarding motherhood AND a full-time career relatively effortlessly? That idea was started by boomers.

The former hippies who voted for Reagan and probably believed they could effortlessly have it all of getting rich yet holding on to at least a few 60s values?

(I won't even ask about how many boomers opposed Vietnam but supported Grenada or Panama.)

Or, to get past stereotyping boomers, how many of the rose-colored glasses wearers have been Republicans for years, and, like Reagan, have never stopped searching for the magical pony amidst all the crap? Too bad the story didn't do a breakout on attitudes.

There's several other issues at stake, too. Two of the biggies are American exceptionalism followed by American historical amnesia, including about our own history, let alone world history.

There was a time before the boomers were born when America had bad problems with income inequality. And now, those times have returned. Boomers apparently didn't learn that this was a possibility.

At the same time, the post-WWII era of massive American economic dominance was an anomaly, NOT a Teilhard-like Omega Point of the exceptionality of America, city on a hill. And, starting with Vietnam (remember that, Boomers?) most American military involvement, for better and often not for better, have been predicated in part on American exceptionalism.

Finally, what does the future hold for following cohorts? To answer that, first, some demarcations.

The Baby Boom has traditionally been considered to run 1946-1964. Why the Census and others use 1964 as the end point, I don't know. (The peak birth year of the boom was 1958.)

I'm going to take 1961 as the cutoff. Either Kennedy or Nixon would have been the first president born in the 20th century, so, it's a good sociological break.

But, I will NOT start GenX there. Instead, I propose a Transitionals mini-generation running 1961-1969. This cutoff point still leaves this cohort old enough to at least vaguely remember the end of Vietnam and the end of Ford, if not of Nixon. It also leaves even the young end old enough to be in junior high school by the time Reagan was elected and in adulthood by the time he was gone. In short, less affected by Reaganism than actual GenXers. I base this not just on me, but anecdotal experience of friends my age. (Personally, I can't identify with the increased materialism or the increased conservativism, on average, of true GenXers.)

I run GenX at 1969-1985. That leaves even the youngest entering high school by the time of 9/11. And, I run Millennials from 1985 to 2003, tentatively, using the Iraq war as a break point. The degree to which American politics has changed since then correlates to that.

The ownership society is unhealthy — literally

In Texas, at least, one of the key components of President Bush and other alleged fiscal conservatives and their “ownership society” has been health savings accounts.

Well, they’re pretty unhealthy here and everywhere

Today, with only 5 percent of the 114 million Americans covered at work opting for such health plans, their future is in question. In Texas, regarded as the birthplace of the HSA, only 387,000 people have signed up out of the 12 million with employer-provided insurance.

Hmm, at 3 percent, Texas is below the national average, even!

The reason HSAs are flopping like a Texas catfish in summer heat?

Lack of employer support:

To be successful, an HSA must have employer support, said John Goodman, president of the National Center for Policy Analysis in Dallas. “If employers don't put money in the HSA, all you have is a high-deductible plan” — something unlikely to appeal to many employees, he said.

Given that Schmuck Talk Express is likely to tout HSAs as part of the solution to American healthcare needs, this bears watching. Indeed, that’s already happening:

Mr. Goodman said high-deductible plans get at the heart of the health cost problem — overuse of medical services by people who, if they paid with their own money, might decide against that trip to the doctor.

“If a mother wakes up in the middle of the night with a sick child, we want her to think about the cost of the emergency room visit," said Mr. Goodman, dubbed by many the “Father of Medical Savings Accounts.”

Mr. Goodman is now a health policy adviser for Republican presidential candidate John McCain.

But, as noted elsewhere in the story, HSAs favor the healthy. And richer.

And, at least here in Texas, there’s yet another problem. Insurance companies (shock me) not passing on all the savings:

Kevin Whitney, chief operating officer for Dallas-based Flexible Benefit Group Inc., … said that HSAs should be cheaper and that insurers are not passing on the savings from the fewer claims they get.

Read the full story; it’s a good one.

Oh, and the insurance issue? IMO, we need federal regulation of insurance companies. A no-brainer.

The ‘ownership society’ outwits even economics Nobelists

Jim Jubak has the lowdown on page 2 of his latest column.

We've gradually discovered, for example, that most people are terrible managers of their own retirement money. Most people, in this case, includes the more than 20 winners of the Nobel Prize in economics that (Peter) Gosselin interviewed.

Jubak has other insights, including that the “ownership society” has produced almost as much income variability among people in the top 10 percent of incomes as the bottom 10 percent.

Now, as he notes, the bottom 10 percent don’t have any buffer or cushion, but it’s interesting the top 10 percent hasn’t opened its eyes yet. After all, in many ways, the “ownership society” has only benefited the top 1 percent of society, not top 10 percent.

Gosselin is the author of the newly- published “High Wire: The Precarious Financial Lives of American Families,” from which Jubak drew his column.