It was fun while it lasted. We Baby Boomers got to diss our elders when we were young and borrow without restraint through middle-age. Few generations have traveled such a smooth stretch of financial/psychological highway.
But now that we’re…old…the world we created isn’t so congenial. Our savings are inadequate, jobs are scarce, and retirement, as a result, is out of reach for many of us. We are, in short, reaping what we’ve sown these past four decades. From today’s Wall Street Journal:
Oldest Baby Boomers Face Jobs Bust
Many older Americans fear they will be working well into their 60s because they didn’t save enough to retire. Millions more wish they were that lucky: Without full-time jobs, they are short of money and afraid of what lies ahead.
Deborah Kallick was a professor of biomedical chemistry at the University of Minnesota until she ventured into the private sector in 2000 with a job in genome research. She is now one of more than four million Americans aged 55 to 64 who can’t find full-time work. That number has nearly doubled in five years, according to U.S. Department of Labor figures in October.
Ms. Kallick, 60 years old, has been unemployed since 2007 and lives in the Northern California home of an ex-boyfriend. She has run out of unemployment insurance, used up most of her retirement savings and is indebted to relatives and credit-card companies.
A good job could settle her accounts, she said. Until then, Ms. Kallick relies on generosity, occasional consulting work and the sale of sweaters, purses and other possessions on eBay.
“It is very hard to work through this and learn to be calm and happy day to day,” said Ms. Kallick, who never married. “It has taken a lot of strength and courage to learn to do that.”
Older Baby Boomers are trying to postpone retirement, as many find their spending habits far outpaced their thrift. With U.S. unemployment at 8.6%, and much higher among people in their teens and 20s, younger members of the labor pool accuse Boomers of refusing to gracefully exit the workplace.
But their long-held grip is slipping, as employers look past older Americans to younger, cheaper workers.
The Labor Department counts people as unemployed only if they have looked for a job in the previous month. By that definition, 6.5% of workers aged 55 to 64 were unemployed in October, below the national average but more than twice the jobless rate for the group five years earlier.
Taking into account the number of older people who want full-time work but are unemployed, working part-time or need a job but have quit looking, the percentage jumps to 17.4%, or 4.3 million Americans ages 55 to 64, according to the government data. The number has grown from 2.4 million in October 2006.
This group without full-time work now accounts for more than one in six older Americans seeking positions.
In some ways, older people are doing better than everyone else: Among all U.S. workers, 20% are unemployed, underemployed or have given up looking for jobs. But older people have far less time to rebuild savings.
“This is new. It is different. It is worse than we have experienced before and it is very widespread,” said Carl Van Horn, head of the John J. Heldrich Center for Workforce Development at Rutgers University. “It is going to get worse. You are going to have a higher level of poverty among older Americans.”
Older people have more trouble finding new jobs. Among unemployed workers older than 55, more than half have been looking for more than two years, compared with 31% of younger workers, according to the Heldrich Center. Among older workers who found a new job, 72% took a pay cut, often a big one, the Rutgers data show.
The problem has been building for decades: Inflation-adjusted, middle-class incomes have stagnated in parallel with a free-spending culture of indebtedness that has left many Americans with too little saved. Over the same time, many U.S. companies cut pensions and shifted to less-generous retirement-savings plans such as 401(k) accounts that have stagnated or diminished in the market tumult of past years.
Older families aren’t just failing to save, they are increasingly draining accounts that were supposed to help finance retirement.
The median household headed by someone aged 55 to 64 has $87,200 in retirement accounts and other financial assets, according to Strategic Business Insights’ MacroMonitor database. If each of the 4.3 million unemployed or underemployed people in this age group runs through half the family savings, that will, in theory, total $188 billion in lost retirement money.
The typical retirement-age household has too little saved to maintain its standard of living in retirement, according to actuarial and Federal Reserve data.
Financial planners often advise that retirement resources be large enough to provide 85% of a person’s working income. Median households headed by a person aged 60 to 62 with a 401(k) account have saved less than one-quarter of what is needed in that account to live as well in retirement, according to Fed data analyzed for The Wall Street Journal by the Center for Retirement Research at Boston College.
The trouble spreads across generations. Older people hang on to jobs or, out of desperation, take lower-level jobs for which they are over-qualified. Either way, they displace younger workers.
In the past, older people who lost jobs often gave up and retired. No longer. In October, two-thirds of people aged 55 to 64 had jobs or wanted them, up from 59% in 1994, according to Labor Department data.
At an age when they should be generating peak incomes and savings, many unemployed and underemployed Americans are applying for early Social Security benefits and spending what’s left in their retirement accounts.
Kathi Paladie, 64 years old, lost her job as an executive assistant at a mortgage company in Tacoma, Wash., six years ago. She hasn’t found full-time work since but works occasionally as a phone interviewer for a political survey firm.
Her retirement savings is spent, and she said her monthly $800 Social Security checks, $100-a-week unemployment benefits and occasional paychecks barely cover expenses.
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