Something Terrible Is Happening To Boomers
Summary
TLDRThe video examines why nearly half of Baby Boomers lack retirement savings despite being billed as the wealthiest generation. It outlines how the three pillars of retirement income - personal savings, Social Security, and pensions - are becoming increasingly unstable. With longer lifespans and rising healthcare costs, many Boomers can't afford essential living expenses. Their adult children may be unable to provide caregiving due to financial constraints. The crisis illuminates systemic issues in the US economy and social structures, impacting multiple generations.
Takeaways
- ๐ฑ Nearly half of Baby Boomers have no retirement savings
- ๐ณ Boomers are now the fastest growing homeless demographic
- ๐ธ The 3 financial pillars for retirement are getting shaky
- ๐ Politicians have been raiding Social Security funding for decades
- ๐ค Social Security funds will be depleted by 2034
- ๐ Pensions have been largely replaced by inferior 401(k)s
- ๐ค Wall Street profits off high 401(k) fees that erase savings
- ๐ซ Healthcare costs in retirement average $275,000 per couple
- ๐ Most Boomers canโt afford nursing home care that averages $8k/month
- ๐ญ Many Millennials can't afford to care for aging Boomer parents
Q & A
What percentage of baby boomers have no retirement savings?
-45% of baby boomers have no retirement savings.
Why are baby boomers becoming the fastest growing homeless population?
-Many baby boomers do not have enough retirement savings to support themselves financially in their later years. Their lack of savings combined with cuts to Social Security benefits and unstable 401k returns are causing financial hardship.
How is Social Security funding being impacted?
-Social Security is impacted because the government has been taking money from the fund and spending it on other programs instead of saving it. This has depleted the Social Security reserves.
What changed with the introduction of 401k plans?
-401k plans shifted the cost and responsibility of retirement savings from employers to employees. This resulted in more market risk for individual retirement accounts.
Why are 401k fees so detrimental?
-The high fees charged on 401k accounts compound over time, exponentially reducing total returns. On average, fees can cost a family $155,000 over their lifetime.
How has increased life expectancy impacted retirement planning?
-Increased life expectancy means retirement funds need to last longer. It also raises the old age dependency ratio, meaning more retirees rely on fewer workers to support programs like Social Security.
What expenses typically increase in retirement?
-Healthcare costs significantly increase in retirement, with estimates that a healthy senior couple will need $275,000 just to cover out-of-pocket medical expenses.
Why can't many baby boomers rely on their children?
-Many Millennials are struggling financially themselves with debt, unaffordable housing, and stagnant wages. They often cannot afford to take time off work to provide elder care.
Why are nursing home shortages an issue?
-Many nursing homes are understaffed, overcrowded, and operating at a loss. Over 1,000 have closed since 2015 due to lack of funding and resources.
What other retirement crisis is on the horizon?
-Many jobs are at risk of being lost to automation and AI. This could severely impact Millennials' ability to save for their own retirement down the road.
Outlines
๐ฎ 45% of Baby Boomers Have No Retirement Savings
Paragraph 1 discusses that 45% of baby boomers have no retirement savings despite common perceptions that they are the wealthiest generation. It explains the three main sources of retirement income - savings, social security, and pensions - are becoming unstable. Many baby boomers are experiencing homelessness as they cannot rely on these income sources in their retirement years.
๐ซ Social Security Fund Projected to Run Out by 2034
Paragraph 2 explains how the Social Security fund is projected to run out by 2034. Money taken from the fund over the years was replaced with IOUs instead of being paid back. With more money going out of the fund than coming in as baby boomers retire, there will only be enough taxes coming in to cover 77% of promised benefits by 2034.
๐ฑ Increased Life Expectancy Strains Government Resources
Paragraph 3 discusses how increased life expectancy is putting a strain on government resources to support the growing elderly population. With the old age dependency ratio projected to increase to 50% by 2075 in the US, taxes and retirement ages may need to be raised to cover increasing healthcare and other costs.
๐จ Your Job is Being Taken in a New Way
Paragraph 4 states that something strange is happening to jobs where people are getting fired without actually getting fired. It provides a link to learn more about what is happening and how to stop it from happening.
Mindmap
Keywords
๐กBaby Boomers
๐กretirement savings
๐กSocial Security
๐ก401(k) plans
๐กhealthcare costs
๐กnursing home shortage
๐กMillennials
๐กcaregiving burden
๐กold-age dependency ratio
๐กthree-legged stool
Highlights
45% of baby boomers have no retirement savings
Baby boomers are now the fastest growing generation to experience homelessness
The average baby boomer spends about $52,000 a year in retirement
Social Security fund projected to run out by 2034, reducing benefits by 23%
401K plans shifted retirement costs from employers to employees
51% of actively managed 401K funds fail to beat the stock market
Average 401K fees cost American families $155,000 over their lifetime
12,000 people turn 65 every day in 2024 as markets crash
Healthy couple will need $275,000 for healthcare costs in retirement
70% of baby boomers will need long-term care costing over $7,988 a month
Medicare does not cover long-term care needed by most baby boomers
Over 1,000 nursing homes closed since 2015, capacity shrinking
Millennials struggle to assist parents due to jobs, debt, housing costs
Unpaid caregivers over 50 lose $300,000 in income and benefits
People getting fired without getting fired - click to learn more
Transcripts
there are 73 million Baby Boomers in the
US and they can all retire by 2030 but
at the same time 45% of baby boomers
have no retirement savings and they are
now the fastest growing generation to
become homeless so if everyone is saying
baby boomers are the wealthiest
generation what's going on what happened
to all their money chances are when you
think of retirement you see yourself
sipping spicy Margaritas in Costa Rica
or cruising down the Miami freeway
counting your money all then to the
three-legged stool in finance the stool
basically represents the three most
common ways retirees receive income in
their Twilight years the only problem is
the three legs are starting to get
wobbly firstly there's savings to think
about after working for 46 years you're
expected to have a sizable Nest Egg
saved up from which you can slowly
withdraw from after you stop working the
problem is the average baby boomer isn't
prepared 45% of baby boomers have no
retirement savings and out of those who
do 28% have less than $100,000 saved now
$100,000 might sound like a lot of money
but on average people older than 65
spend about $52,000 a year to live
there's Rising medical expenses
delicious sugar-free applesauce and
Billy Joel concert tickets you don't
have to be a math Wiz to realize the
average baby boomer will burn through
their savings sooner rather than later
and it's already happening baby boomers
are now the fastest growing generation
to experience homelessness in the 1990s
11% of the homeless population were 50
and older today that number is nearly
50% many baby boomers across the country
are now coming to terms with the reality
that working your entire adult life is
no longer enough to guarantee that
you'll have a roof over your head in
your later years so we know the savings
leg can't be relied on what about the
other two but first if you want to
easily save more money then you have to
use a savings goal tracker and checklist
I'm giving away mine for free free link
down below during a Great Depression
many Working Families lost their jobs
businesses collapsed people starved and
food rations became the norm one of the
groups hit the hardest were older
Americans who despite working for 46
years of their lives now lived in
poverty in response President Roosevelt
passed a Social Security Act in 1935 to
provide a financial safety net for
retirees basically retirees received
monthly checks from the government to
spend on Essentials but Social Security
wasn't free the government designed it
as a pay as you go program they added a
new tax for those currently working from
every paycheck a bit of money was
deducted and put into the Social
Security trust fund in return current
workers were promised that they would
receive monthly checks from the fund
after they retire and it worked after
committing Decades of their lives to the
workforce retired older Americans could
now enjoy some Leisure without
constantly worrying about finances not
surprisingly the poverty rate among
elderly households from from 35% in 1959
to 11% in
1995 now Social Security is the number
one source of income security for
retirees with over 90% of retirees
receiving Social Security benefits but
all of that is about to change remember
the little promise the government
made current workers were promised that
they would receive monthly checks from
the fund after they retire in the 1980s
President Reagan began to take money
from the Social Security fund and spent
it on other stuff Wars tax cuts for the
rich and other government programs
President Bush and Clinton followed suit
in place of the trillions of Social
Security funding they all took they just
put in an IOU a piece of paper that
promises the US government would
eventually pay the money back the
problem is they never really did the
Social Security fund has been cash flow
negative since 2010 meaning more money
is going out than coming in for a long
period of time baby boomers were the
largest generation in the US during
their working years they contribute a
lot of money to the fund for the silent
generation to draw from and now that the
largest generation is retiring in Mass
they're starting to get some of that
money back the problem is there's now
fewer workers paying into the system
it's projected that the social security
Reserve fund is going to run out by 2034
meaning all new benefits will come
directly from current payrolls taxes but
taxes would only cover 77% of their
promised full benefits you can think of
it like this if you were promised a
$1,000 hosal Security check every month
now you would only receive
$770 as the cost of everyday items
increase a 20% pay cut is pretty
significant the problem is many
Americans believe the 2034 year forecast
is guaranteed but it isn't it's a
warning about what will happen in a good
economy it isn't really account for the
unknown and uncertainty of what could
happen during a bad one since 2019 the
size of the gap between what social
security has promised and what it
expects to pay has grown by nearly $10
trillion more than 40% for every $1 that
the program has collected in payroll
taxes it has generated roughly $2 of
promises that no one expects it to keep
but what about the third leg that baby
boomers can hopefully rely on prior to
the 1980s pension were the mainstream
private option for retirement income
basically companies would set aside
money for their employees invest that
money for them and then these employees
would be guaranteed payouts after they
retire it was a time when company
loyalty actually meant something the
more you work there the more money you
received in your payout but then Ted
benna changed everything he believed
pension plans were too expensive and too
risky for companies and so he did
something about it enter the 401K plan a
much worse retirement option in
literally every single way where you now
set your money aside you pick the
Investments and if you don't do this
then too bad so sad companies love this
alternative it was a lot less work and a
lot less risk for them so many stopped
offering pension plans and migrated to
401K plans instead Shifting the cost of
retirement from the employer to the
employee and the timing was perfect
there were two stock market booms in the
1980s and the 1990s which easily
convinced workers that investing in your
own 401K was the better move from 1980
to 2008 participation in pension plans
fell from 38% to 20% while participation
in plans like the 401K increased from 8%
to
31% the problem is a whole new
generation of people who never invested
before were now chasing the bull market
with the nest egg they needed to retire
Steve sholo and Dan Robertson were two
Public School teachers who didn't know
much about Finance but they saw everyone
else was was raving about the 41 case so
they decided to join in by 1996 they had
doubled their retirement Nest EG to
$500,000 by 1999 their portfolio topped
$1 million and they were thrilled they
thought they made the best decisions of
their lives but by the early 2000s the
dot bubble burst and sholo and Robertson
saw their Fortune Crater from $1.5
million down to
$500,000 tens of thousands of people who
had been on the verge of retirement were
now forced back to work because they
lost everything but the problems didn't
stop there whenever money and investing
is involved you can bet Wall Street
finds an opportunity to profit this is
Robert Hilton Smith an economist who
regularly contributed to his 401k plan
who one day noticed something was off
about his account despite the market
doing relatively well his 401K
investment account was barely increasing
after digging for days and weeks he
finally saw where his money was going
the plan itself was invested into more
than 20 different mutual funds Each of
which had its own costs and fees there's
Asset Management fees trading fees
marketing fees recordkeeping fees
administrative fees fees for not knowing
there were fees a 2 to 3% fee might seem
inconsequential but it's not just as
investing your money allows you to
compound and increase your wealth in a
longterm cost and fees also rise
exponentially over time suppose you have
an investment portfolio worth
$60,000 you plan to contribute $500 a
month to it for the next 25 years and it
grows at an average rate of 8% per year
at the end you'd have
$884,000 in your portfolio that's a lot
of money but if you had a 2% fee you'd
be left with only
$66,500 that tiny 2% fee cost you
$278,000 in 2012 Hilton Smith reported
that on average an American family will
pay nearly
$155,000 in 401K fees to Wall Street
over their lifetime but that's not even
the worst of it the idea behind these
high fees is that when it comes to
mutual funds in your 401k a professional
is helping you invest your money to beat
the stock market the problem is about
51% of actively managed funds fail to do
so you're actually statistically better
off hiring this cat Orlando in 2013
Orlando performed experienced and
qualified wealth managers at picking
stocks and the best part Orlando doesn't
require any hidden fees just a can of
tuna once in a while about 12,000 people
will turn 65 every single day in 2024
the problem is their 401K plans are
being wiped out Fidelity found that the
average 401K balance felt by 23% in Q3
of 2023 and many are expecting the stock
market to to get even worse according to
McKenzie Americans are living longer
than ever thanks to better working
conditions and Healthcare Innovations
life expectancy has nearly doubled since
the late 1890s which is great we all
have more time to spend with our parents
and grandparents the only problem is it
now takes a lot more money to retire
than what we our government and economy
originally anticipated in economics they
call this the old age dependency ratio
basically it's the number of individuals
older than 65 per 100 people of working
age the higher the ratio the greater the
burden on the current Workforce and
overall economy to support and provide
for the retirees government services and
programs will be stretched taxes will
need to be increased on the working
population to support the increased
expenses and potential pressure to
increase the retirement age for future
Generations the average old age
dependency ratio across oecd countries
like the UK Australia and Germany is 28
meaning for every working age people
there are 28 individuals who are 65
years or older the problem is this ratio
is projected to a 50% in the US by
2075 as housing education child care and
food prices continue to climb many
Americans are struggling to make ends
meet as a result more and more of the
younger generation are refusing to have
kids if you think about it our entire
social and economic structures have the
same issues as a Ponzi scheme if the
Next Generation isn't bigger than the
last it impacts almost everything
naturally as you get older and retire
expenses go down no more overpriced
drinks at the bar or buying the latest
tech gadgets but there is one expense
that will go up without fail one
particular crisis that baby boomers will
have to face headon a 2017 research
study found that a healthy 65-year-old
couple retiring will need to spend
$275,000 to cover their healthare cost
in retirement Dr V visits 20 different
pills and stress balls 70% of baby
boomers will need some form of long-term
care Assisted Living hospice care or
nursing homes the problem is the average
cost of a nursing home is between
$7,988
34 per month so where are baby boomers
expected to get this kind of money from
most don't have enough in savings Social
Security will be cut and 41k plans are
crashing but if you want to quickly save
more money using a savings goal tracker
and checklist is the most effective way
to do that get mine for free link down
below you might think one option is
Medicare basically federal health
insurance for people over 65 it's more
affordable than private insurance the
problem is Medicare doesn't cover
long-term care so the other option is
Medicaid basically health insurance for
lowincome Americans but to be eligible
for Medicaid you need to be at or below
133% of the federal poverty level
meaning most middleclass baby boomers
will be in between being too poor to
afford the care they need and too rich
to qualify for Medicaid but even if
they're able to get long-term care
there's still one more problem getting
into a nursing home is more challenging
than ever nursing homes are experiencing
Staffing shortages overcrowding issues
and many are actually operating at a
loss as a result more than 1,000 nursing
homes have closed since 2015 and more
are on their way out but there might be
one last Saving Grace for Baby Boomers
who still have a decent life into their
Twilight years their children the
problem is Millennials are in a tough
spot themselves housing affordability
stagnating wages and a looming Deb
crisis many won't be able to get time
off work to provide the complex ongoing
assistance their parents might require
and they can't afford to quit because
households can no longer support
themselves with a single income some
Millennials will be for forced to take
reduced hours or look for a job with
more flexibility potentially resulting
in lower pay meaning they'll be in a
tough spot of having to choose between
caring for their aging relatives and
their own Financial survival for me
personally family comes before
everything else but for many Millennials
they'll need to determine if they
themselves will have enough money when
they retire a 2006 research study found
that when family members over 50 take on
unpaid caregiving roles they'll lose on
average over
$300,000 in Lost income and benefits
which is a substantial amount but it's
more than just money there's the mental
physical and emotional exhaustion that
you will undoubtedly experience and
what's even more terrible can only be
summarized by this post you end up in a
strange Dynamic where you wish for the
day when you don't have to deal with a
daily caregiving stressors and then you
realize that you longing for the death
of your parents which is a strange
terrible place to be but what if I told
you that the baby boomer crisis should
be the least of your worries what most
people don't realize is that something
weird is happening to your job for one
of the first times in history people are
getting fired without actually getting
fired click here to learn what's
happening and how you can stop it from
happening to
you
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