It’s that time of the quarter again when we take a step back from stock and bond ideas and I try to shock you into doing something about your retirement planning.
I hope to jolt you into action by quoting just some of the numbers that are stacking up against a comfortable retirement.
Here’s this quarter’s.
The looming glut of baby boomers moving into retirement is no longer looming, it’s here. Every month, more than a quarter-million Americans turn 65.
That’s a trend with profound economic consequences.
Simply put, retirees don’t contribute as much to the economy as workers do. They don’t produce anything, at least not directly, and they don’t spend as much.
Roughly 17% are retired; that’s up from 10% since 2010.
A full one-fourth of this country was born between 1946 and 1964, the typical definition of the baby boom generation. And they are all about to leave the work force and become, for the most part, dependent on those who are left.
An increasing number of nonproducers and a decreasing number of producers and spenders. Do the math!
The dependency ratio, that’s the ratio of people younger than 15 and older than 65 to the working age population, hit 59 in 2010, down from 65 in 1980. But it has all gone downhill from there and the baby boomers are the dominant reason.
By 2020, the Census Bureau estimates, the U.S. dependency ratio will be 65 again; in 2030, it will be 75. That’s in just 16 years!
And if you think it looks bleak for us, take a look at the chart on your screen. We are sitting pretty compared to Japan, Germany, France, the U.K., Canada and Poland. And the 2050 numbers are a lot worse.
The only good news is our rate of immigration is about the only reason the U.S. is in better shape; a comparatively high rate of immigration.
Immigrants tend to have a higher birth rate than the native-born population, and that means some growth in producing and spending in part of the economy.
This dependency equation has to give way somewhere and the most likely place is Social Security. Don’t be under it when it goes.
Make the necessary changes now so you don’t wake up broke in your 80s.