For my generation, born between 1945 and 1965, the music has stopped. The party is over. There are over 50 million of us and we have been spending money on luxury cars, big houses, and other signs of conspicuous consumption that have helped fuel the tremendous post WWII growth in the American economy. To our credit, we created more wealth than any generation before us. As my generation has entered the retirement years (or at least seen it on the horizon), the recession has caused a dramatic change in our spending patterns and this may cause problems with the recovery.
Long-term it is a very good trend that we are saving more money and following the example of our parents or grandparents, who experienced being broke during the Great Depression of the late 1920s through the 1930s. I remember growing up hearing my grandmother, who was born in 1901, tell stories of how tough the Depression was and why saving money was important. She had a tradition of giving her grandkids silver dollars for big events. She never missed the chance to explain why it is important to save. Some of us did save. We put away cash in our 401(k)s and self-directed IRAs. Many of us never believed we would see large amounts of our life savings vanish as the value of our 401(k) dropped as has happened in the past year and a half. We are an optimistic group and fully believe the market will rebound, but as a group our concern is, will our retirement accounts rebound in time for us to retire the way we planned?
For the younger kids in my generation (like me — I am 50), large numbers of us don’t believe there will be social security money available to us when we are eligible to receive it.
As a group, the baby boomer generation is putting the largest financial pressure on the health care industry as we are diagnosed with a new medical condition every time we go to the doctor. For many of us, we are deathly afraid (pun intended) of the government taking over the health care system and leaving us out in the cold when we are 80 years old. We have all heard horror stories of Canadian citizens having to wait months for a nonemergency operation because of the trend of government-run health care systems metering out care according to a financial formula intended to save money. We are used to getting health care on our terms and our schedule.
As a group, it concerns us greatly that the federal government is currently spending money equal to nearly half of our current gross domestic product. We have never seen government spending at such high levels and have serious concerns that runaway government spending may drag out the recession.
Every day we hear on television about retirees needing to come out of retirement and taking jobs paying minimum wage because their investments can’t produce enough interest and dividends necessary to maintain their lifestyle.