Following up on my Gather post of Sept. 5 ("The Bottom Line on the 'Incredible Shrinking Boomer Economy'") I thought I'd bring you this synopis. See what you think...
Flipping though a recent BusinessWeek, a strange title draws my focus: "The Incredible Shrinking Boomer Economy." Oh, really? Of course, everyone from luxury car makers to hoteliers face lower sales in this recession. Unemployment is at a quarter-century high. Disposable income has fallen and the national savings is up. But while actual spending is down for every demographic, economists expect boomers to spend one out of every two consumer dollars in 2010 for the first time ever. So the boomers' share of the overall economy is expanding, not shrinking. Boomers in general have learned from experience that consumption does have its place. It's time to get the debt paid down (or consider taking on little debt at all), work a few years more and enjoy just what you have. But please don't blame the boomers for the shrinkng economy; they're spending more than their fair share.
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Comments: 18
I agree with Visionaerie B. about Cash for Clunkers. We cannot afford a new car, but our taxes are paying people with more income to purchase new cars. Something's wrong with that.
As for clunkers program, why would a car owner who has a paid for car, go back into debt to buy a NEW car that depreciates like a rock (down 60% in 4 years)? This is a pure hype that will cause more debts to be created, and the rest of the taxpayers to support this bad habit of financing debts.
Now, we realize that the rainy day is here - it's time to shop in our closets and in our pantries - use up the surplus, buy less, do better with less.
But many retired boomers are going back to work... I did - two days or so a week!
$xx invested monthly for nn years at 10% investment rate/year
............................20 years ............... 30 years ................ 40 years
$050 .................. $054,398 ............ $171,322 ............ $497,715
$100 .................. $108,797 ............ $342,643 ............ $995,430
$300 .................. $326,390 .......... $1,027,930 ......... $2,986,290
$500 .................. $543,983 .......... $1,713,217 ......... $4,977,150
In the last 6 months, our stock market went up over 50% (JUST IN 6 MONTHS!!!)
My daughter is working now, so she contributes $190 each payperiod into her Roth IRA at 10% investment rate (last 6 months saw an increase of 50% in the stock market). She has $15K in her IRA today. If she keeps contributing $190 every two weeks, and never increased her contribution amount, and never touched the money, she will have $7 million at age 65, tax free!
If she were to increase the contribution by 3% each year, the balance will be just under $9 million. It's painless now, because she has set up an automatic payroll deduction, and never misses the money. This is not too shabby.
With the passing of the Socialize health bill this could increase to 22% by December or January.
It seems more are saving in hopes, than are spending. I cannot find much support for the economy from any of the people I usually read or listen to.
My own town, Portland, is now seeming at risk of this sort of thing because of an EPA mandate that should not apply to us because our watershed has been protected from the kind of pollution most cities are subject to. To let municipal bonds to build a concrete centralized treatment plant here in earthquake land is irresponsible.
We have a gravity-fed system that has been extraordinarily safe and reliable since the 1800's.
Nonetheless, the feds are pushing an unfunded mandate that could enrich international engineering and construction companies and the usual suspects, the big banks. That money largely goes out of our local area and to the headquarters of the conglomerates.
Our elected reps, except one new one, seem uniformly to be afraid of being put in jail by the feds if they don't go along. They appear to quake in their boots about representing over 22 neighborhood-association, physician, and employer groups by asking a senior house member for a waiver, since our water is cleaner now than it would likely be if it is exposed to central filtration and to the human errors that have meant adverse events in other cities. Science backs the community groups, but Bush-era officials are burrowed in at the EPA, so too bad for us.
They are afraid of recriminations if they represent the local people who elected them.
This is risky to health in the usual sense, but it is also profoundly risky for financial health. Raising taxes and ratepayer costs is so obviously harmful to ordinary people, but our reps have such high salaries and perks, they don't seem to remember, if they ever knew, what it is like risk losing homes because of taxes and other monopoly-imposed costs.
Water bills are set to go up, and their estimates of how much are likely gross underestimates.
How can ordinary people pay huge increases in rates and taxes to those who received pay-offs and now have the money we might have gotten from jobs we don't have?
When I began to be involved in this issue, I thought they had to put bonds up in elections. They do not, and they often put them on an agenda on an emergency basis and pass them the day before a big holiday.
It is difficult for municipalities to stay straight when there is so much corruption up the chain. Some really aware communities are able to protect themselves, but the larger the organization, the more difficult it becomes.
One has only to watch Nicholas Kristof, of the New York Times, talking about deformed fish on the Potomac, on Colbert, to understand what the D.C. area has done to its own river. In many places on that river, nearly 100% of the small-mouth bass are severely deformed.