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Personal Savings: Negative for all, especially the boomers

post #1 of 27
2/1/07 at 10:41am
Thread Starter 
Saving for a rainy day... no way

Quote:
The savings rate has been negative for an entire year only four times in history - in 2005 and 2006 and in 1933 and 1932. However, the reasons for the decline in the savings rate were vastly different during the two periods.

During the Great Depression when one-fourth of the labor force was without a job, people dipped into savings in an effort to meet the basic necessities of shelter and clothing.

Obviously that is not the cause in this day and age.

Quote:
Whatever the reason for the low savings, economists warn that it the phenomenon exists at a particularly bad time with 78 million baby boomers approaching retirement age. Instead of building up savings to use during retirement, baby boomers are continuing to spend all their earnings.

The boomers will have spent the federal government into 10 trillion dollars plus of debt. They aren't saving for retirement and in fact will likely walk into retirement with more personal debt than any generation.

They will then stick their hands out, squat on their bottoms and demand to receive more entitlements than any previous generation in history.

I personally do not think this is fathomable. I suspect that the tax burden will become so untenable as to drive large sections of the economy off the books. (Joining the millions of illegal immigrants already off the books)

Understand that just for the government today to stop deficit spending, stop spending the social security "surplus" and begin redeeming the bonds while paying out the benefits of boomers requires a one trillion dollar cut in federal spending.

Then you get to start digging into Medicare which makes this problem look small.

How do you think it will end up?

Nick

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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post #2 of 27
2/1/07 at 10:44am
One would hope that people would learn from this and learn to spend money responsibly, rather than buying more and more on credit that they can't actually pay off.
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post #3 of 27
2/1/07 at 10:56am
Quote:
Originally Posted by trumptman View Post

Saving for a rainy day... no way



Obviously that is not the cause in this day and age.



The boomers will have spent the federal government into 10 trillion dollars plus of debt. They aren't saving for retirement and in fact will likely walk into retirement with more personal debt than any generation.

They will then stick their hands out, squat on their bottoms and demand to receive more entitlements than any previous generation in history.

I personally do not think this is fathomable. I suspect that the tax burden will become so untenable as to drive large sections of the economy off the books. (Joining the millions of illegal immigrants already off the books)

Understand that just for the government today to stop deficit spending, stop spending the social security "surplus" and begin redeeming the bonds while paying out the benefits of boomers requires a one trillion dollar cut in federal spending.

Then you get to start digging into Medicare which makes this problem look small.

How do you think it will end up?

Nick

This has been a major pet peeve of mine, in combination with the enormous demographic of baby boomers retiring, low savings rates, a looming medical care crisis, bankrupt government, skyrocketing taxation, unfair taxation for single people (who now represent a majority of Americans) to tow the line for couples and families ... the crap will really start hitting the fan within 5-10 years.

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post #4 of 27
2/1/07 at 11:55am
Uh, Nick? How else can we buy our SUVs and HDTVs unless we go into debt? Duh.
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post #5 of 27
2/1/07 at 11:57am
Quote:
Originally Posted by BRussell View Post

Uh, Nick? How else can we buy our SUVs and HDTVs unless we go into debt? Duh.

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post #6 of 27
2/1/07 at 11:58am
Quote:
Originally Posted by SpamSandwich View Post

This has been a major pet peeve of mine, in combination with the enormous demographic of baby boomers retiring, low savings rates, a looming medical care crisis, bankrupt government, skyrocketing taxation, unfair taxation for single people (who now represent a majority of Americans) to tow the line for couples and families ... the crap will really start hitting the fan within 5-10 years.

Unfair taxation for single people? Ever heard of the marriage penalty?
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post #7 of 27
2/1/07 at 12:07pm
Quote:
Originally Posted by trumptman View Post

Saving for a rainy day... no way



Obviously that is not the cause in this day and age.



The boomers will have spent the federal government into 10 trillion dollars plus of debt. They aren't saving for retirement and in fact will likely walk into retirement with more personal debt than any generation.

They will then stick their hands out, squat on their bottoms and demand to receive more entitlements than any previous generation in history.

I personally do not think this is fathomable. I suspect that the tax burden will become so untenable as to drive large sections of the economy off the books. (Joining the millions of illegal immigrants already off the books)

Understand that just for the government today to stop deficit spending, stop spending the social security "surplus" and begin redeeming the bonds while paying out the benefits of boomers requires a one trillion dollar cut in federal spending.

Then you get to start digging into Medicare which makes this problem look small.

How do you think it will end up?

Nick


In my opinion some of this is cultural (e.g. "I have to have it NOW"). There's no question that the boomers are like this as a group. My generation, GenX is even worse in some respects. We grew up (many of us) with comforts that we expect right away.

Part of it is also the availability of consumer credit, and frankly, the relatively stable credit market. We've never experienced mass foreclosures in our lifetimes. We've also become accustomed to low interest rates.

However, I think there is a political element here too. You hit the nail on the head when you spoke of entitlement programs. IMO, the reason the boomers and others feel they can get away with not saving is that in America today, people feel they deserve certain things, not the least of which is retirement. We feel we have a God-given right to retire comfortably. But retirement is a relatively new concept, historically speaking. My great grandfather died on the job a 92. Why was he working? Because he needed the money. Now certainly, we don't want to go back to the labor conditions of the early 20th century, but our sense of entitlement is totally out of control.

What I'm saying is that if the Guaranteed Retirement and Social Saftey Nets were removed, people would be forced to save. They would also be forced to save if we changed our welfare/cash assistance programs from a financial beed based system to a working ability based system (perhaps we could retain short term unemployment insurance).

The government should not be in the retirement and saving business. That's the jist of what I'm saying.
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post #8 of 27
2/1/07 at 1:22pm
The single biggest terrorist attack happens in our country and the president says...

"Go shopping."

And you wonder why we behave the way we do.
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post #9 of 27
2/1/07 at 3:36pm
I'll tell you how it will end. Means Testing. Many boomers have saved and taken advantage of the tremendous run in the stock market over the last 25 years. To those, well done and by the way you get less ss benefits. That is the only way it will be resolved. The only question will be who gets less and where the lines are drawn.
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post #10 of 27
2/1/07 at 3:56pm
Quote:
Originally Posted by SpamSandwich View Post

This has been a major pet peeve of mine,

What has? That people are complete morons when it comes to saving the slightest amount of money?
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post #11 of 27
2/1/07 at 4:04pm
Quote:
Originally Posted by trumptman View Post

Saving for a rainy day... no way



Obviously that is not the cause in this day and age.



The boomers will have spent the federal government into 10 trillion dollars plus of debt. They aren't saving for retirement and in fact will likely walk into retirement with more personal debt than any generation.

They will then stick their hands out, squat on their bottoms and demand to receive more entitlements than any previous generation in history.

I personally do not think this is fathomable. I suspect that the tax burden will become so untenable as to drive large sections of the economy off the books. (Joining the millions of illegal immigrants already off the books)

Understand that just for the government today to stop deficit spending, stop spending the social security "surplus" and begin redeeming the bonds while paying out the benefits of boomers requires a one trillion dollar cut in federal spending.

Then you get to start digging into Medicare which makes this problem look small.

How do you think it will end up?

Nick

Here is an interesting article on how us Baby Boomers have squandered all of the social security benefits. I believe most of it is the governmets problem from 30 + years ago.

http://baltimorechronicle.com/2006/031506Lambert.shtml

I have been pretty lucky and have a pretty good nest egg for retirement. The biggest problem I have now is figuring out how I am going to pay for health insurance after I retire.

If you think we are going to squat on our bottoms asking for hand outs, you are totally wrong on that one.
The spirit of resistance to government is so valuable on certain occasions that I wish it to be always kept alive. Thomas Jefferson
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The spirit of resistance to government is so valuable on certain occasions that I wish it to be always kept alive. Thomas Jefferson
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post #12 of 27
2/1/07 at 5:12pm
Quote:
Originally Posted by Chucker View Post

What has? That people are complete morons when it comes to saving the slightest amount of money?

There is that.

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post #13 of 27
2/1/07 at 5:14pm
Quote:
Originally Posted by SDW2001 View Post

Unfair taxation for single people? Ever heard of the marriage penalty?

I thought marriage was a bit of a penalty, anyway... you mean you're taxed for it as well?

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post #14 of 27
2/1/07 at 5:50pm
Thread Starter 
Quote:
Originally Posted by ronaldo View Post

Here is an interesting article on how us Baby Boomers have squandered all of the social security benefits. I believe most of it is the governmets problem from 30 + years ago.

http://baltimorechronicle.com/2006/031506Lambert.shtml

I have been pretty lucky and have a pretty good nest egg for retirement. The biggest problem I have now is figuring out how I am going to pay for health insurance after I retire.

If you think we are going to squat on our bottoms asking for hand outs, you are totally wrong on that one.

Actually I'm pretty right on that one. The 30 plus years ago you mention is called Boomers and their entitlement mentality hitting the ol' cash register.

I've suspected and been betting on a couple more incidences of inflation, maybe even an incident of hyperinflation. It will be the next generation's way of flushing the boomers and all their crap out of the system.

Nick

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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post #15 of 27
2/2/07 at 8:15am
Quote:
Originally Posted by ronaldo View Post

Here is an interesting article on how us Baby Boomers have squandered all of the social security benefits. I believe most of it is the governmets problem from 30 + years ago.

http://baltimorechronicle.com/2006/031506Lambert.shtml

I have been pretty lucky and have a pretty good nest egg for retirement. The biggest problem I have now is figuring out how I am going to pay for health insurance after I retire.

If you think we are going to squat on our bottoms asking for hand outs, you are totally wrong on that one.

As for your health insurance, don't worry about it; The AARP and its damn-the-future-as-long-as-I-get-benefits-now lobby will make sure that medicare patients continue to get top notch care to squeeze out that extra 6 months of bouncing between the hospital and nursing home. Meanwhile, the working 40 year old with three kids and a wife will just have to hope that his health holds out because he makes too much to quality for the government charity that old people get and to little afford that pretty good nest egg for retirement.

I would apologize for the rant, but after coming off of two months of internal medicine, I am one pissed off resident and I need this catharsis. I wasted so much time and energy and so much of the government's money on people who essentially just couldn't accept they were dying. Because they are "entitled", they keep getting readmitted month after month. And who gets kicked out of the hospital early, or sent home from the ER knowing full well that they have no primary follow-up? Working guys with enough honor and pride to feel good about making an honest living, even if it doesn't provide health care.

We have our priorities so screwed up that it paralyzes me with anger sometimes. Perhaps its human nature to assume that the good times will last forever. I don't think that I can hold boomers at fault for that particular human failing. What I can blame them for, however, is that by their age, they should know better.

I think what needs to happen with all this social security and medicare nonsense is to draw a line in the sand and finally say: if your were born after <insert date here>, you will not be receiving benefits. Sorry, but don't say we didn't warn you.
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post #16 of 27
2/2/07 at 8:39am
Thread Starter 
Quote:
Originally Posted by BRussell View Post

Uh, Nick? How else can we buy our SUVs and HDTVs unless we go into debt? Duh.

I own an SUV and a large screen television and I used this little thing I like to call...cash.



Nick

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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post #17 of 27
2/2/07 at 8:57am
Thread Starter 
Quote:
Originally Posted by Kishan View Post

As for your health insurance, don't worry about it; The AARP and its damn-the-future-as-long-as-I-get-benefits-now lobby will make sure that medicare patients continue to get top notch care to squeeze out that extra 6 months of bouncing between the hospital and nursing home. Meanwhile, the working 40 year old with three kids and a wife will just have to hope that his health holds out because he makes too much to quality for the government charity that old people get and to little afford that pretty good nest egg for retirement.

I would apologize for the rant, but after coming off of two months of internal medicine, I am one pissed off resident and I need this catharsis. I wasted so much time and energy and so much of the government's money on people who essentially just couldn't accept they were dying. Because they are "entitled", they keep getting readmitted month after month. And who gets kicked out of the hospital early, or sent home from the ER knowing full well that they have no primary follow-up? Working guys with enough honor and pride to feel good about making an honest living, even if it doesn't provide health care.

We have our priorities so screwed up that it paralyzes me with anger sometimes. Perhaps its human nature to assume that the good times will last forever. I don't think that I can hold boomers at fault for that particular human failing. What I can blame them for, however, is that by their age, they should know better.

I think what needs to happen with all this social security and medicare nonsense is to draw a line in the sand and finally say: if your were born after <insert date here>, you will not be receiving benefits. Sorry, but don't say we didn't warn you.

This would be a very interesting thing to examine from the perspective of European countries. Obviously they have completely socialized health care whereas we have it for the elderly and children. What does a Germany or France do with someone who is 77 and feels entitled to an extra six months of life at a prohibitive cost?

You point out that we could draw a line. The issue there is that Social Security is a ponzi scheme. Most people believe they have some account somewhere that has their money that they have paid in stored in it. It is pay as you go and those who aren't going to get benefits in the future will realize that it is a scheme if they are still forced to "contribute" to those who receive benefits today.

Many people like myself know that Social Security is terrible return for the amount of income contributed. Personal savings accounts are being promoted where forced savings would avoid many of the problems with todays system. The issue becomes that no one is willing to double pay. (Not that the generations after the boomers could afford to pay in the first place) Also no one is willing to forgo benefits that have been promised.

I suspect that the way the promise will end up being kept is by cheating which is of course what the government does best. They will take the promised dollar amount, somehow change the way inflation is calculated in adjusting for that promise and then promptly print loads of money to inflate their way out of the problem. The only person this will end up hurting are retirees and... well they screwed themselves in the first place.

Nick

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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post #18 of 27
2/2/07 at 9:25am
It's really amazing that people in the U.S. have to ask why taxes should be used to help the people that pay them.

SDW sidebar: SDW is absolutely right. A multi-billionaire paying 10% on a multimillion dollar income is definitely paying more taxes than a person making $80k with a 25% tax bill.
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post #19 of 27
2/4/07 at 1:39pm
Quote:
Originally Posted by lunocrat View Post

It's really amazing that people in the U.S. have to ask why taxes should be used to help the people that pay them.

SDW sidebar: SDW is absolutely right. A multi-billionaire paying 10% on a multimillion dollar income is definitely paying more taxes than a person making $80k with a 25% tax bill.

It's amazing really...that you actually believe the second scenario exists and 2) that you think it's what I meant.
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post #20 of 27
2/5/07 at 12:07am
Quote:
Originally Posted by trumptman View Post

What does a Germany or France do with someone who is 77 and feels entitled to an extra six months of life at a prohibitive cost?

Nick

Answer: what we can. Which tends to be pretty much everything. And we can *still* afford a much healthier society and universal healthcare, because we have socialised healthcare.

This, for me, is such a no-brainer it's ludicrous. European countries spend much, much less on healthcare from the state purse (taxes) then the US. But because there would be something morally hazardous or 'anti-American' about the word 'social' the US chooses to waste billions of dollars and still can't keep the poor healthy.
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post #21 of 27
2/5/07 at 10:45am
Thread Starter 
Actually from what I have read, Europe has as much of an entitlement and demographic timebomb as the U.S. if not moreso. I just wondered if there were more experience with denying care due to certain procedures being declared elective with regard to end of life matters.

Nick

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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post #22 of 27
2/5/07 at 11:23am
Quote:
Originally Posted by trumptman View Post

Actually from what I have read, Europe has as much of an entitlement and demographic timebomb as the U.S. if not moreso. Nick

You're absolutely right here. Time will tell but the strains are beginning to show in Germany and Italy in particular. The 'ponzi' scheme works well when the demographics are in your favor. As the population matures and the demographics change it will be another story. Another country with unfavorable demographics and generous social programs is Japan.
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post #23 of 27
2/5/07 at 11:55am
Quote:
Originally Posted by backtomac View Post

You're absolutely right here. Time will tell but the strains are beginning to show in Germany and Italy in particular. The 'ponzi' scheme works well when the demographics are in your favor. As the population matures and the demographics change it will be another story. Another country with unfavorable demographics and generous social programs is Japan.

This same social time bomb is creeping up in China also, of all places. There are worker shortages now, and there is also their massively disruptive social situation regarding the male to female ratio, caused by the "one child" policy.

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post #24 of 27
2/5/07 at 12:30pm
Good point Spam, I saw a piece on China's gender disparity and that's gonna be a problem with interesting societal consequences.
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post #25 of 27
2/5/07 at 1:04pm
Quote:
Originally Posted by trumptman View Post

Actually from what I have read, Europe has as much of an entitlement and demographic timebomb as the U.S. if not moreso. I just wondered if there were more experience with denying care due to certain procedures being declared elective with regard to end of life matters.

Nick

Yep. I'm not sure where Harald is getting the idea that the German health care system is working. It hasn't for a long time.
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post #26 of 27
2/5/07 at 2:11pm
Quote:
Originally Posted by trumptman View Post

Quote:
Originally Posted by BRussell

Uh, Nick? How else can we buy our SUVs and HDTVs unless we go into debt?

Duh.I own an SUV and a large screen television and I used this little thing I like to call...cash.


But have you gotten an SUV with HDTV yet?

I bought my last car (not an SUV) cash, and had the cash on hand to buy my big HDTV, but took advantage of 0% interest credit (now all paid for anyway). The only debt I have is my mortgage and whatever is temporarily sitting on credit cards waiting to be paid in full when the bills come.

I also have more than a year's worth of take-home income in savings, apart from what's in my 401k. I wish I'd started taking my 401k more seriously earlier in my life than I did, but I'm not doing too badly at this point, and I have 21 years left until age 65 to work on it.

As long a everyone else's fiscal irresponsibility doesn't come crashing down on my head, I should be doing fine. That, however, is a big "if".
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post #27 of 27
2/5/07 at 2:34pm
Having just responded to Spindler's "Easier in the 70's thread", and then having read this, I feel kinda like I just watched last week's American Idol, and most of you were told by Simon that you're 'not going to Hollywood'.

But you don't know how much I WANT this! But you don't know how much I NEED this! I can be a star if you give me one more chance.

Both SS and Medicare are now ponzi scheme's, but they were not started to swindle coming generations. Your/our Senate has looked at and rejected fixing these institutions since they were created. Always postponing a real "fix", by pushing action on these item back one generation. Hillary years ago on socializing medicine, not because she was wrong, but noone liked her. Bush of late on SS because he may be a dumb-ass and got us into a dumb-ass war.

We are gonna get what we pay for. Like it or not.

Paz
What we obtain too cheap, we esteem to lightly...it would be strange indeed if so celestial an article as FREEDOM should not be highly rated. Thomas Paine
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What we obtain too cheap, we esteem to lightly...it would be strange indeed if so celestial an article as FREEDOM should not be highly rated. Thomas Paine
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