The Boomers’ Last Hurrah

About 10,000 Baby Boomers (those born between 1945 and 1964) retire each and every day in the United States. And now a large number are reaching age 70 each and every day. Our last hurrah is about to unfold.

The aging of my generation will produce a couple of indisputable consequences. First, outside of health care, the massive wave of retirements will depress consumption — that is, spending — in a very significant way, which will limit growth and exert deflationary pressures.

Second, this retirement wave will exacerbate our pension mess by increasing pension and Social Security costs dramatically. This comes against a backdrop of underfunded plans.

Despite what the right-wing propaganda machine persistently spews forth, Social Security is a relatively easy fix. But the state and private pension fix isn’t.

State and corporate pension plans are grossly underfunded. Some have already failed. More failures are to come. In short, some will renege on their obligations and retirees will not be receiving the monthly checks they’re expecting. (The only “bright”spot for the pension plans is that Americans are now dying earlier, thereby reducing the plans’ payouts.)

Saving some of the public systems will require tax increases, which will further suppress consumption.

Third, equity prices and, therefore, investment portfolios, will take a hit. Take General Electric for example. GE’s underfunded pension hole is $31 billion. Yet the market has yet to fully price into the stock this huge deficit.

Many other companies have large unfunded pension commitments. This will not be good for asset values and, by extension, individuals’ and endowments’ portfolios. Less spending. Deflationary pressures.

There are 72 million Boomers in the U.S. My generation had a major impact on our economy and society as we moved through adulthood. Don’t expect the impact to be any less as we move through retirement. It’s just that the impact will be very, very different.

“You get old and you realize there are no answers, just stories.”

Garrison Keillor wrote the words in the title of this post. If you’re young, you may not get it. If you’ve been around a while, I suspect you will.

The danger, at least from my perspective, is that you get carried away with stories when you get older. You know what I mean: telling the same stories, over and over, each time stretching them out just a little longer. I suspect most of us over the age of 60 have done it.

I’ve caught myself doing it. I always regret it (assuming I realized it). I wish the bored but polite listener would have stopped me.

So what’s the antidote? Continue reading

Is America Great?

_dsc0061Some people think America is going to hell in a hand basket. Some people think America isn’t great anymore. Phooey, I say!

I think America is already great. It’s far from perfect, of course. And some things are pretty bad, such as our dysfunctional national politics. And the way we’ve allowed people of wealth to dominate politics and our economic policies.

We have work to do, and it’s gravely disappointing we’re not going about the business of getting things done. But that doesn’t mean America isn’t great. Continue reading

Hopeful Signs

I think we are up to our waders in you-know-what. I’m not going to recite any of the you-know-whats here. I’ve mentioned some (but not all) of them in prior posts. Suffice it to say I think the situation is serious — perhaps, from a financial and political standpoint, even dire.

That said, I remain incredibly hopeful. I prefer hopeful to optimistic because what we call optimism is too often untethered from reality — mere wishful thinking if you will. Too often it takes the form of a naive, childish outlook — a don’t worry, be happy persona.

Sometimes one should be worried (or perhaps concerned is a better word, as your great-grandmother prefers, Vera). Sometimes we need to acknowledge the clouds and gathering storms and work our butts off to prepare and avoid some of the disastrous consequences that might otherwise ensue.

Pure optimists aren’t very good at that. They’re generally the ones who get blindsided and take the full brunt of the blows.

So the whole optimist-pessimist dichotomy doesn’t appeal to me. Nonetheless, if I had to claim one or the other, I suppose I’d claim both, in the model of Antonio Gramsci: “Pessimism of the intellect, optimism of the will.”

Hope, on the other hand, is a concept more to my liking. At least for me, it doesn’t deny reality. Hope isn’t afraid to talk about the clouds and to confront risks and danger. But it does so with full awareness of what shines behind the clouds. Hope, you see, allows you to see the sun through the clouds.

I see the sun. Here are some of the reasons why: Continue reading