Another sobering about retirement, or lack thereof: Households that expected to find retirement just around the
corner will have to work longer. The main reason? Debt, debt, and more debt: mortgages, home equity loans, kids’ college expenses and credit card debts are saddling 60- to 64-year-old households who expected their retirement-age years to be stress-free. This is not the first article I have ever come across about baby boomer debt. Since 2008, many studies have surfaced about the plight of older adults and how they have fared during this recession and housing meltdown. It is heartbreaking to read about decades’
worth of retirement planning going awry.
Ah, but perhaps I misstated the problem: Is this really decades’ worth of retirement planning that has all of the sudden crumbled due to a few recessionary years and an upside down housing market? I would venture to say that is not the case: the operative word here is “decades.” I wonder how many households who are delaying their retirement and having to work into their 70s actually started planning for retirement back in their 20s. The likely scenario of lack of preparedness probably goes something like this:
- Age 20: “I am in college and can’t even think about retirement right now. There is plenty of time for saving.”
- Age 30: “I am established in my career but I just put all of my money on a down payment for this McMansion This should double in price in 10 years and count toward my retirement investments!”
- Age 40: “How am I supposed to save for retirement with a mortgage and two car payments and kids’ sports and school activities? Wait until the kids are grown and out of the house and then I can save more.”
- Age 50: “One kid is in college but needs help with expenses. The other is living at home and trying “find himself;” he needs help with his cell phone bill and car insurance I can’t just cut him loose yet. Plus I still have 10 years left on the mortgage.“
- Age 60: “Wow, the house did not appreciate like I thought it would. I thought I was supposed to be able to retire on my home equity. I don’t have near enough in my 401(k). What happened?”
This is not to say that every household that cannot fulfill their retirement dream has not planned ahead. But to be blunt, these reasons for not saving are all too common: high expectations for housing prices, high expectations for living standards, and high expectations for children to go on to college on their parents’ dime. (Yes, many parents in their 50s and 60s are paying off their kids’ student loans.) The “culture of consumption” has finally caught up with a generation that wanted to have it better than their parents did, and want to give their kids more than they will ever have. Perhaps that is not such a good thing if it means working until you drop dead.