A wakeup call was sounded to all who attended MDRT’s Boomertirement industry summit in New York City in late April.
MDRT President Philip Harriman, CLU, ChFC, told attendees the organization is “deeply concerned” about the looming boomer retirement crisis.
And with good reason. Statistic after statistic revealed at the event backs up the premise that the majority of the country’s 78 million boomers are dangerously unprepared for retirement. While some presenters focused on opportunities the boomer retirement wave offers financial advisors, other presenters gave doomsday predictions about how unprepared boomers will devastate Social Security and Medicare.
“I don’t think we are ready for this,” said Dr. Alan Greenspan during his keynote conversation with Harriman. Greenspan, the former chairman of the U.S. Federal Reserve, warned that the government is falling short in collecting taxes for both Social Security and Medicare.
The Social Security crisis, he said, “could be solved in about 20 minutes,” by technically sound people of both political persuasions, taking that long only because the first 15 minutes would be devoted to pleasantries.
“The only thing missing is the political will to make it happen.”
We won’t hold our breath.
Greenspan said the government shouldn’t be promising more to its constituents than it can deliver, and that is happening in Medicare. “Something’s got to give,” Greenspan said. He predicted a very dramatic increase in co-payments, and said the upper-income groups could expect 100 percent co-pays in the future.
Greenspan was optimistic about the future of annuities. As life expectancies continue to rise, the appeal of guaranteed income for life is going to become increasingly valuable and demand for annuities will increase.
Greenspan also said many boomers will be retiring later than usual out of financial necessity, but noted that it will help the country.
The most gloom and doom on the first day of the Boomertirement Summit came from Dr. Jack VanDerhei, research director of the Employee Benefits Research Institute.
Among an array of scary numbers, VanDerhei said that less than 50 percent of boomers nearing retirement age will have enough money to meet even basic living needs for the rest of their lives.
Boomers just don’t have a realistic idea of how much money they will need in retirement. The amount they will need to pay for health care, nursing home care, and prescription drugs when they retire is significantly more than they think.
Advisors have a daunting but crucial task in front of them. Talk some sense into as many clueless boomers as you can. They need your help much more than they know.