Monday, April 21, 2008


Baby boomers are about to create a demographic shift that they and other stakeholders appear unprepared for. A whole generation is negotiating toward the threshold of retirement and its uncertainties, yet too many of its members appear primarily focused on reducing the impact on aging. They have made assumptions on the state of the long term financial health of their social security and medical care.

With the arrival of 2011, the first of the boomer generation will turn 65, qualifying for the potentially overwhelmed and underfinanced programs of Medicare, Medicaid and pensions. The lack of savings and preparedness by the baby boomers, and their government as well as the rest of society, suggest complete inattention to the affect that the coming shift will have on the collective social, political and economic fabric.

A current Presidential candidate potentially becoming the oldest person ever elected to the White House is not an accidental quirk of nature. The average North American born today is expected to be more productive for longer than any member of preceding generations and has a reasonable chance of becoming a centenarian. The population’s average age is increasing, and by 2020 it is expected that there will be 53 million people 65 years or older. The retirement and medical care programs were developed when average life spans were shorter, cost of living was much lower, and medical care expenses were cheaper, yet the system is committed. There is some good news however, as older people are healthier and have fewer disabilities somewhat reducing their dependence on medical care. There is an expectancy that boomers will head into retirement in better health than the previous generation. It remains that health care will become the heaviest burden weighing on the federal budget over the coming thirty years.

As boomers make their way through life in retirement, they will tap into the pension system that has represented the significant portion of national savings and investment funds which have historically provided fuel for the economy. There is an anticipated reversal of that trend to begin in the mid 2020’s. The capital base supporting boomers will begin shrinking, and the impact will affect both the retirees and the broader economy.

Baby boomers must make plans, as much as they can, to augment the financing of their retirements through the establishment of cash flow streams of their own creation. Boomers should not assume that current or future pension fund governance will work in their favor, or that market forces and direction will prove positive influence on their collective pension nest eggs. Boomers should prepare to make up possible shortfalls when bills arrive, whether for fixing leaky roofs, or purchasing prescribed drugs not covered by medical plans. They should also exert pressure on Congress, demanding that fiscal responsibility and oversight be assiduously applied to government spending, and that effective reforms be implemented to the health care system.

Boomers, whatever you are saving, increase it. Every dollar will count, but then, that’s not news.

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