New Seniors

Most pre-boomers have retired, are about to, or would like to retire.  All we want is to live the rest of our lives in relative comfort.  Our parents taught us to save for rainy days and for the golden years, when we stopped earning an income through our jobs.  No matter what kind of work we did, our habit was to aside money in bank accounts, IRAs, 401Ks and other places where we thought our hard earned savings were safe.

Then, last year, things started to go south.  Troubles in the housing market, the crumbling of financial institutions, a slow down in consumer spending and a variety of other factors converged to throw the U.S. and the world into crisis.  Suddenly, the stocks, bonds, and mutual funds we depended upon to grow and return a dividend to complement and supplement social security and other retirement plans quickly lost their value.

What seemed like enough to last through our lifetimes was cut by 30, 40 and even 50 percent.  I don’t know about you, but my financial situation went from something I discussed with an advisor every quarter to the number one thing on my mind.  The news media was there to remind me of how bad things were every time I managed to shove the subject from my consciousness.

There’s been some recovery in the investment market, but we’re not out of the woods, yet.  In fact, all indications suggest it’s going to be next year before we see the kind of improvement necessary for our investments to grow on a consistent basis.  So I tried to put aside enough cash in money markets and CDs – even though the interest rates are lousy – to get through this impending period of adjustment.  Regaining lost value is not going to happen overnight, because if a portfolio fell by 40 percent, it will have to increase by 60 percent from its new lower base in order to be were it was before.  Therefore, the next few years will, no doubt, be unsettling from a financial standpoint.

Yet, I believe the recovery will occur, because our country has seen financial disarray before and we always came back stronger — thanks to American creativity, ingenuity and plain old hard work.  The one nagging question I have is, “Are the boomers along with Generations X and Y tough enough to make the hard decisions to get the job done for now and for the future?”

Bail outs for poorly run companies and individuals who did not manage their personal finances are only going to delay the inevitable.  There’s no such thing as a free lunch.  If a company takes in less than it makes, it must change or go out of business.  If people spend more than they earn, they must reorganize their debts or go bankrupt.  Expecting those of us who have followed the rules to be saddled with their problems is foolish and looking to the government to pick up the slack is irresponsible.  After all, this will only result in a bigger national budget deficit and lead to inflation plus higher taxes for all.  And, how’s that going to help you live out your retirement?

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