Apr

13

Impact of Boomers Retirement

Posted by cameron

April 13, 2007 |

The oldest boomers are 60 years old and fast approaching retirement. According to government statistics 20% of today’s workers are over 50 meaning of course that 20% of the work force is nearing retirement age. There is a lot of conjecture on how this will affect the country as a whole along with some real truths. The usual questions are these: 1. What will employees do when the very people who run the companies leave? 2. What happens to Social Security and Medicare? 3. What happens to the stock market?

What is known?

Civil Service will be hardest hit and governments at all levels know it. There are a higher proportion of older people working in the government than anywhere else. According to a US Department of Labor survey taken in 2000, the sectors being hardest hit are:

Teachers

Registered nurses

Administrators in education

Public administration officials

Social workers

Financial managers

Lawyers

Plumbers, pipe fitters, steamfitters

Police and fire personnel.

The last one is misleading because they retire early anyway. If you are younger than the boomers then these will be the hot careers in the future; it has already started in nursing.

The current trend of outsourcing jobs to other countries is not going to help companies. Boomers are a global phenomenon.

Also known is that Social Security and Medicare are going to be in trouble in the future. Democrats have argued that taking back the tax cut for the wealthiest 1% of us will fix Social Security for decades but I haven’t done the math. What I do know is that nobody talks about the Medicare problem. As usual there is nothing going on in Washington to resolve these problems so I can only assume they will just print more money when they need it. This of course will simply devalue the dollar and our standard of living over the long haul.

We also know that companies will be in trouble if they do nothing. It is quite conceivable for some companies to go out of business. Mom and Pop shops will close in greater numbers than ever before. Eventually free market economics will kick in and wages will rise for youngsters and some of the elderly will be induced to stay through flexible work packages. AARP research suggests that many boomers will continue working after normal retirement age. I think that is easy to say before retirement but that number will dwindle when they actually reach retirement age and beyond. Eventually only those that have to work will look for jobs. I plan to work after retirement age but not for someone else. It all depends how you ask the question. I don’t know how often this has been said but work ethic is not the same today. I think employees are in for a hard time.

Some worry that boomers will start withdrawing 401k investments and move the money into bonds and cash. I do not subscribe to this notion because most people have learned something about investing and are truly concerned their money will not last. There are two ways for that to happen: invest in low yielding vehicles or overspend. I think people will become more conservative but not move out of the market. Value funds are outperforming growth funds and if boomers do what I think they will then that trend will continue.

My Conclusion

This brings me to my last point and the reason for writing this post. Employees have been sticking it to their older workers for a couple of decades now. What goes around comes around. The very people they having been trying to get rid of are now going to get some sweet deals to stay on. It’s not for me but good luck to those who want it.


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