Not too long ago all the talk was about the impending intergenerational transfer of about $10 trillion from the current crop of senior citizens to the following “boomer” generation. Eventually some analysts raised the ante to $40 trillion. With this potential windfall as a prospect it appeared that in a collective sense the boomers were going to retire in style. All they had to do was sit tight and wait.
It has been suggested that the likelihood of such an expectancy may have been part of the reason the boomers were labeled the “Now” generation. Spending was in-saving was out. For the past 20 years or so there has been expressed a growing concern that this segment of the population was dis-saving rather than accumulating nest eggs for the future.
In recent months, however, real alarm has been raised about the perceived inadequacy of retirement income for the leading edge of the boomers now approaching retirement. So the question is-what happened to the $10 trillion to $40 trillion that was supposed to start being transferred? I have not heard nor seen any recent discussion that would indicate the transfer was, in fact, taking place.
I don’t pretend to be an analyst or demographer who might shed light on the issue–but it does seem to me that there are several things that are self-evident.
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First of all, the current retirees are living longer and better, so they still have the assets. Moreover, many, if not most, have shaken their worries about the possibility of a recurrence of the Depression of the 1930s, which they experienced and remember all too well. So without that worry they are spending more freely-enjoying travel and vacation homes. It is altogether likely that we will soon see a period when large numbers of both parents and their offspring will be retired at the same time. This is a compelling reason for Congress to face up to the future problems of Social Security.
There has also been some erosion of funds to be transferred. The bursting of the “tech bubble” on the stock market took its toll to the extent of several trillion dollars. True, the recent surge in stock prices has restored some of this-but not always to the same people. The recent rise in real estate prices has also increased the value of assets that are held, but much of that has been borrowed out to satisfy current desires. For the average person real estate (home) values can be tricky in terms of determining net worth. The fantasy is, you can sell your own home at an enormous profit and buy a new one that is better and cheaper. The reality is somewhat different. So long as you have a continuing need for shelter, swapping houses is seldom done at a profit-unless it is a substantial downsize.