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Ideal Retirement Is Non-Existent For Most

17 August 2010 No Comment

As I continue to overwhelm you with pessimistic economic insight, the WSJ had a recent article that was interesting on the baby boomers and their retirement picture.  The article paints the picture where policymakers of course always encourage saving for retirement, but the problem is that the baby boomers whose spending has fueled economic growth for decades are cutting back severely as they plan to enter retirement.

The cut back on spending is huge and is a must for most baby boomers if they wish to be able to actually retire.  Our policymakers are stuck between a rock and a hard place since most baby boomers can’t retire unless they cut back spending yet spending is needed to keep the economy somewhat afloat.

This is a trend that cannot be fought.  The spending will continue to slowdown and yes, it will be a drag on the economy.  To take this conversation further, we haven’t even discussed the people who are being forced into retirement due to lack of work – typically we focus on those who choose retirement.

Many workers are caught in between a state of unemployment and a state of retirement, likely collecting unemployment compensation and then when that runs out, they’ll transition into social security!  What a system!

Regardless, it is truly frightening to consider how the numbers simply don’t add up for most people to retire.  Whether it’s the broke pension systems or those who are terribly underfunded on private retirement accounts, it just doesn’t add up for so many people.  This is the result of decades where our net worth was tied to things such as real estate.  If you want to understand how to successfully structure your personal finances, you must read this post.  Otherwise, you’re going to end up like most baby boomers today.

Furthermore, you need to understand the massive implications of the baby boomers executed a massive spending slowdown.  There is nobody to take their place.  Consumer spending will continue to decline over the coming years and maybe decades.  Economic growth will have to come from somewhere else, and the transition to that “something else” will likely be fairly ugly.  Don’t be long retailers and other lifestyle stocks with a long-term horizon.

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