Six Forces Destroying Retirement for Baby Boomers
By Brent Green, author of Marketing to Leading-Edge Baby Boomers
Baby Boomers once flaunted young-at-heart mantras proclaiming reverence for spontaneity and a quick-fix perspective:
If it feels good, do it.
Do your own thing.
Live for today.
Fast-forward forty years and these aphorisms are becoming niggling stereotypes ushering them into retirement.
From the perspective of their vociferous critics, Boomers have become the furry costar of The Tortoise and the Hare fable, heedlessly hopping ahead of the plodding reptile with a want-it-all-now mentality. As children learn long before they can spell catastrophe, the careless rabbit runs out of gas before the finish line. Moral: Winners are purposeful and persistent rather than rash and reckless.
Cynics blame Boomers for their excesses, their self-absorption and failure to plan wisely for the inevitable consequences of aging. As accusers lambaste, this country has too many overleveraged people in middle age, racking up credit card debt and at the threshold of insolvency, a massive retirement planning malfunction.
Some dire warnings estimate that at least one-third of the generation may be financially unprepared for retirement as this juggernaut starts crossing the “golden years” threshold in January 2011.
According to AARP’s analysis of Federal Reserve data, Leading-Edge Boomers — those born between 1946 and 1955 — have a median net worth of just $146,000, including home equity. Considering over three decades of employment history, this is a gloomy average performance and hardly an adequate nest egg.
However, closer examination of sociological and demographic factors reveals other issues contributing to why many Boomers may be inadequately prepared for retirement. The Six Forces Destroying Retirement for Baby Boomers are:
History of generational overcrowding
In the short span of 20 years, from 1946 to 1964, America grew by 76 million Boomers. The country was not equipped for this population explosion.
Boomers share overcrowding nightmares such as snaking lines encircling movie theaters. They recall public school classes convening in temporary manufactured houses erected to compensate for not enough space inside old school buildings. They remember competing against peers at every turn, from getting into a good university to winning a promotion.
It has always been a buyer's market when it comes to tapping the Boomer human resources aquifer. Overcrowding has limited the careers and opportunities for many. Doors have not opened; promotions have not happened; salaries have not steadily increased.
Corporate downsizing
In 1995, the New York Times ran a series of articles about job erosion across America, leading eventually to a book entitled The Downsizing of America. As the newspaper editors observed, between 1979 and 1995, 43 million jobs vanished. “And while many more have been created, increasingly, the jobs that are disappearing are those of higher-paid, white-collar workers, and many of the new jobs pay much less than those they replaced.”
Boomers were often the first to endure sacrificial “resource reallocations” because they populated the middle-management jobs of greatest vulnerability. A new language emerged to describe their plight: downsized, separated, severed, unassigned, or surplused.
The situation for Boomers today is more tenuous than it was in the mid-90s — and they are older and more vulnerable. Too many vie for too few jobs.
The Economic Policy Institute in Washington has corroborated this view with a revelation during a time of alleged recovery: Since the business cycle expansion began in November 2001, payrolls have contracted by 1 million (1.2 million in the private sector), making this the weakest recovery in terms of employment since the Bureau of Labor Statistics began tracking monthly data in 1939.
The nation lost a total of 2.6 million jobs in 2008, the worst job loss since 1945.
Downsizing means job losses, but often it means more. As the New York Times concluded: “For two decades, most people had also seen their wages level off or decline, and now dispossessed workers were frequently finding that the replacement jobs available to them paid appreciably less than their lost positions. Everywhere, people were working longer hours and feeling expendable.”
Exportation of blue collar, then white collar jobs
Academy Award-winning documentary director Michael Moore has built a reputation as an irascible filmmaker. He first became nationally prominent when his contemptuous lens exposed General Motors for exporting manufacturing jobs from Flint, Michigan. The corporate pronouncement decimated Flint, thrusting both the city and its workers into poverty. Roger and Me was more than a feisty documentary; the film became a metaphor for the breakdown in loyalty between large corporations and workers. It warned those who hang on to the belief that a job well attended is a career entitlement.
The downsizing virus afflicting American blue-collar jobs has now become a contagious trend for white-collar sectors, as more compellingly argues in his newest film, Capitalism: A Love Story.
Massachusetts General Hospital transmits CAT scans for examination by Bombay radiologists. Information technology workers in Connecticut watch their jobs drift to Bermuda. Computer techs in Ghana sort New York City’s parking tickets. General Electric’s investment-credit arm, G.E. Capital, has added 15,000 stock researchers…in India.
It is depressing that nobody warned blue-collar Boomers who, when displaced from manufacturing jobs a decade ago, hustled off to community colleges to learn information technology and other exportable white-collar occupations. Who could have imagined that foreign nationals would someday take over Boomers’ white-collar jobs for a fraction of the annual salary?
Shift from defined benefit to defined contribution retirement plans
Once upon a time, employers wanted to buy and reward loyalty. They accomplished this in part with guaranteed or “defined benefit” retirement plans. That was the governing view for most of the 20th century. Then along came “defined contribution” plans, the ubiquitous 401(k). In a growing economy, this type of plan could accumulate significant wealth in a shorter time, irrespective of length of tenure — an investment approach preferred by younger investors.
The number of employees covered by employer-paid defined benefit plans has fallen precipitously in the last two decades. US News estimates that guaranteed retirement programs cover a third fewer workers today than two decades ago. Furthermore, many Boomers will outlive their companies, and then what happens to their retirement accounts? Just ask former employees of Enron, Arthur Anderson, Global Crossing, or dozens of other dot-bomb era companies.
A market crash beginning in March 2000 that decimated market investments
The Employee Retirement Income Security Act, signed into law in 1974, made it possible for the traditional security of a long-term retirement plan to become a market shell game. This legislation allowed companies to throw the risk of funding retirement programs squarely on the shoulders of employees. And risk it has been. On April 3, 2000, the U.S. NASDAQ exchange recorded its largest one-day fall, 26 years after E.R.I.S.A. became law. Thus began the process of evaporating retirement savings.
Since the stock market collapse began, corporate pension funds have lost $630 billion — a 14 percent decline. Lost in this staggering number is a full accounting of the number of people whose private retirement accounts and long-term personal savings are in jeopardy or who have already suffered financial ruin. The exodus of capital from retirement accounts continued shockingly through 2008.
Generational discrimination
Baby Boomers have been catching bad vibes since they arrived at the threshold of adulthood. They became the frequent topics of derision during the Vietnam War era, with President Richard Nixon dismissing them as bums. Vice President Spiro Agnew called them “an effete corps of impudent snobs.”
During the 1980s, Boomers allegedly ushered in the greed is good era, and their collective image morphed into the narcissistic, materialistic yuppie – a characterization as demeaning as sixties’ monikers such as flower child or hippie. These old stereotypes are resurfacing in new ways.
A 28-year-old webmaster for The Cato Institute, writing recently for Fox News Online, begins his op-ed harangue with an unsupported but pervasive observation: Baby Boomers are “the most self-aware, self-congratulatory, and self-destructive generation in American history.”
He then dwells on the implications of this image as it pertains to Boomers in retirement: “Boomers I think suffer from a natural inferiority complex. The generation just before them – the World War II generation – saved the world, after all. And when your parents saved the world, what, really, can you do to better them? So when Boomers aren’t busy voting themselves entitlements to prolong their lives, they’re striving for immortality — if not for Greatest Generation status, which is taken, then at least for The ‘Damn the Results, At Least We Tried’ Generation.”
A photographer from Canada has recently taken on a crusade to elucidate all the evils wrought on society by Boomers, as he sees them. His blog can be found on the Internet under the heading, “Boomer Deathwatch.” He stumbled across some comments by me in a news report on CBS Marketwatch.com, where I had observed that “'Generational prejudice is the last area where we can openly be prejudicial and stereotypical and comfortably get away with it in mixed social situations.” My point exceeded the boundaries of a single generation, but was an observation of the psychological tendency of xenophobes to lump people together by the accident of birth date and then assign negative images to the group, thereby denigrating the image of individuals within the group. We have called this tendency racism, sexism, and a few other “isms.”
Frankly, no generation escapes negative stereotyping, and generational divisiveness seems to be the last frontier for those who lump people together based on broad, ill-defined generalities.
This fervent Canadian levied a self-righteous reinterpretation of my conclusion: “There’s something fantastic, perhaps even a little obscene, about a member of a demography that’s reaped a lifelong social and economic cornucopia deciding late in life that they’re being discriminated against, purely because they aren’t being marketed to as sympathetically or as assiduously as they think they deserve. Be assured, though, that it won’t last – their voice is loud, their gravitational pull immense, and in some office somewhere a harried group of young men and women are wracking their brains figuring out how to make adult incontinence sexy and dignified.”
Yet, generational stereotypes are not limited to younger people; some of the nastiest Boomer critics are Boomers.
Steve Chapman, a columnist for the Chicago Tribune, waxed philosophic about the impact of political dominance by America’s elderly in an article posted on MSNBC’s Slate online magazine, entitled, Meet the Greedy Grandparents. Why America’s Elderly Are So Spoiled. Chapman rails against America’s elderly and their self-serving dedication to a mushrooming Social Security debt, as well as the federal legislation providing Medicare prescription drug benefits. He finds his fellow Boomers eager to share the fiscal mismanagement and culpability:
“Boomers have gotten our way ever since we arrived in this world, and the onset of gray hair, bifocals, and arthritis is not going to moderate our unswerving self-indulgence. We are the same people, after all, who forced the lowering of the drinking age when we were young, so we could drink, and forced it back up when we got older, so our kids couldn't. On top of that, we're used to the best of everything, and plenty of it. We weren't dubbed the Me Generation because we neglect our own needs, Junior. If politicians think the current geezers are greedy, they ain’t seen nothin’ yet.”
Does all this negativity foreshadow a difficult time in retirement for Boomers? As society has learned from decades of racism and sexism, individuals who are part of a group, detested by some and disliked by many others, often experience discrimination. Although sometimes restrained and difficult to measure, discrimination is nevertheless limiting with long-term economic consequences.
Age discrimination filings with the EEOC under the Age Discrimination in Employment Act have increased rapidly during the last few years: in 2007, over 19,000 filings, in 2008, over 24,000 filings. Most of us know someone who is convinced that a statistically disguised layoff was in reality due to age-related factors.
It is also true that displaced workers face different odds of maintaining the same or higher salary if reemployed, depending on age. In today’s fractured corporate environment, workers 25 to 54 have a better than 73 percent chance of reemployment in equivalent jobs. People 55 to 64 have a less impressive 61 percent rate of reemployment, and in January 2008, 25 percent reported reemployed earnings losses of 20 percent or more.
Why has the retirement opportunity horizon clouded for so many unemployed or underemployed older workers? Connect the dots, and it is straightforward to see that discrimination against Boomers and those slightly older may have something to do with how employers perceive them: as over-the-hill workers … too expensive, not as productive, expendable.
Forestalled or thwarted retirement savings bode badly for Boomers. Both the affluent minority and the struggling majority must recognize that the coming retirement funding crisis is a reflection of many complex demographic and sociological issues. It is rarely a consequence of failed moral rectitude.
Former Vice President Spiro Agnew denounced Boomers when they were young and arrogantly naïve. One unwarranted criticism forty years ago may actually hold shades of truth for the future. Given the gloomy retirement and health care outlook for so many aging Boomers, would it be any surprise if they do become “nattering nabobs of negativism”?
Author of Marketing to Leading-Edge Baby Boomers: Perceptions, Principles, Practices, Predictions (Paramount Market Publishing, March 2006), Brent Green frequently speaks at national conferences on the mature market segment and the coming unprecedented reorientation of American business to an aging population. He also provides expert commentary for The Los Angeles Times, US News & World Report, CNN Headline News, Business Week and The Wall Street Journal.
Now listed on Google Books, Brent Green’s expanded 3rd edition, Marketing to Leading-edge Baby Boomers: Perceptions, Principles, Practices, Predictions (Paramount Market Publishing) is available through Amazon.com or directly through the publisher, www.paramountbooks.com.
Established in 1986, Brent Green & Associates, Inc. develops integrated marketing communication programs for a diverse list of clients, with emphasis on direct response media, integrated promotions and marketing public relations. The firm has received over 50 regional, national and international awards for creative and strategic excellence, including the Direct Marketing Association’s International Gold ECHO Award. In 2000, The Rocky Mountain Direct Marketing Association selected Brent as Direct Marketer of the Year.
Green has served in a leadership capacity with many professional and public service organizations, including as board chair of the Colorado Springs Convention & Visitors Bureau and as programming chair for both the Business Marketing Association and the Rocky Mountain Direct Marketing Association. He is executive director of the Foundation for American Boomers.
