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The thread title is taken from the title of the article: I am trying to sort out the underlying point of the article. Especially having participated in this forum for over a decade and knowing the wide range of opinions by the many in this forum over the years.
Paradoxically, even as psychological studies show that people generally become happier about their lives the older they get, they nonetheless are “overly pessimistic” about their financial futures, according to the analysis.
The report not only highlights growing economic anxiety among an increasingly important and influential cohort of the population, but also suggests that this overarching pessimism and caution could adversely affect the economy and slow GDP growth.
Quote:
“The benefits of longer lives and retirement may be limited if older households curb their consumption or investment in preventive health measures because they are overly pessimistic about their future financial health,” the study warned. “An overly negative viewpoint toward the future may also create self-fulfilling economic problems if it leads to an overly aggressive fixed-income portfolio.”
And that pessimism translates into declining purchases and consumption.
Quote:
“It’s literally the only population in America that may be under-consuming – and unfortunately a part of the population that owns more of the buying power,” Fellowes added. “So as the economy becomes more and more dependent on that population, there’s no question that the growth will be stunted.” Fellowes says it’s too soon to gauge or project this potential elderly consumer drag on the economy, but he insists it will be substantial. On a more emotional level, the new study suggests that financial worry among older Americans may be getting out of hand, as fears of inadequate savings or a sudden downturn in the markets are frightening many – and resulting in gloomy self-fulfilling prophecies.
“An overly negative viewpoint toward the future may also create self-fulfilling economic problems if it leads to an overly aggressive fixed-income portfolio,” the study says.
So MathJak stop worrying and go spend the millions now! I must be honest and admit on a personal level we have been thinking of ourselves within a similar context and our financial spending.
I have to plead "guilty" to being a boomer under spender, but it is not because I am pessimistic or fearful about the future. Instead, it's a life-long habit, a comfort zone. I always lived below my means and continue to do so, but not in an extreme fashion. I do not feel at all guilty about it, either.
I am perfectly content with my current way of living, which I do not consider Spartan.
I have to plead "guilty" to being a boomer under spender, but it is not because I am pessimistic or fearful about the future. Instead, it's a life-long habit, a comfort zone. I always lived below my means and continue to do so, but not in an extreme fashion. I do not feel at all guilty about it, either.
I am perfectly content with my current way of living, which I do not consider Spartan.
You read a lot and are well versed in societal thinking. All of us regardless of age are seen as a financial source for someone else. Financial entities want a share of our assets, corporations want a share of our assets. States and local government often want a larger share of our assets. Folks are not happy when we don't use our resources to drive the economy so they can take a share of our assets for their personal gain etc etc etc. The roofer wants us to replace our roof etc.
Our investment patterns can drive the market and thus the returns of others. Some of us on the other hand are very expensive and the chatter of some politicians is not favorable to us.
People want our money being used to drive the economic engine in the most productive way possible.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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We are perhaps an exception. With 4-5 years left to retiring we are in our peak earning years, and are spending to be sure that we have everything we need paid for when we have that income cut to just 401k, pensions and SS. For example, we have two car payments plus a 3rd (truck) paid off, so upon retiring will have 3 with no payments, two will be under 40,000 miles, and are now looking at travel trailers. We are also taking nice vacations while we can afford it and are young enough to enjoy it.
We are perhaps an exception. With 4-5 years left to retiring we are in our peak earning years, and are spending to be sure that we have everything we need paid for when we have that income cut to just 401k, pensions and SS. For example, we have two car payments plus a 3rd (truck) paid off, so upon retiring will have 3 with no payments, two will be under 40,000 miles, and are now looking at travel trailers. We are also taking nice vacations while we can afford it and are young enough to enjoy it.
You are the worried about norm. When you are spending now and won't be in a few years or will you be? With pensions, 401k and SS will you become overtly cautious?
You are the worried about norm. When you are spending now and won't be in a few years or will you be? With pensions, 401k and SS will you become overtly cautious?
Very few late-Boomers have a pension coming. If you're the last of the Boomers now 53 and not a state/local worker, it's very unusual to have one. 70th percentile household net worth for the last 10 years of Boomers is only about $350K. The median 53-year-old is looking at a near-poverty level retirement once they can't work. That's totally different retirement math from the first of the Boomers who are now age 74. Full retirement age was shifted up. No pensions. Their kids had enormous college bills and the parents were expected to pay much of it. Even worse, they had a lower birthrate and the kids they did have aren't as prosperous as 20 years earlier so most don't have children to help out financially.
It really does sound like this article is mostly speculation about results from future anticipated estimated actions by a general segment of the population. How is that for a fuzzy proposition.
People have been aging out of the workforce and using/spending less from the beginning of time. The economy, investments, and planning for the future will adjust and as always there will be winners and losers.
This is not a new story or topic. In fact there have been discussions in this forum over a decade ago. I remember discussing this with MathJak over the years. I remember my thoughts on the topic over during my pre and early retirement years. My personal projections have become a reality.
Very few late-Boomers have a pension coming. If you're the last of the Boomers now 53 and not a state/local worker, it's very unusual to have one. 70th percentile household net worth for the last 10 years of Boomers is only about $350K. The median 53-year-old is looking at a near-poverty level retirement once they can't work. That's totally different retirement math from the first of the Boomers who are now age 74. Full retirement age was shifted up. No pensions. Their kids had enormous college bills and the parents were expected to pay much of it. Even worse, they had a lower birthrate and the kids they did have aren't as prosperous as 20 years earlier so most don't have children to help out financially.
Perhaps retirement wealth is concentrated and not evenly distributed to or close to being balanced. The population being discussed is the affluent retirees and not what you see as the norm.
Very few late-Boomers have a pension coming. If you're the last of the Boomers now 53 and not a state/local worker, it's very unusual to have one. 70th percentile household net worth for the last 10 years of Boomers is only about $350K. The median 53-year-old is looking at a near-poverty level retirement once they can't work. That's totally different retirement math from the first of the Boomers who are now age 74. Full retirement age was shifted up. No pensions. Their kids had enormous college bills and the parents were expected to pay much of it. Even worse, they had a lower birthrate and the kids they did have aren't as prosperous as 20 years earlier so most don't have children to help out financially.
First year boomers are turning 71 this year.
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