Mountain of Retirement Problems

A great coach is credited for recognizing the strengths of his players, and for creating plays that play up to those strengths. A coach studies his team, knows what should work and what most likely won’t work, prepares his team to win against any opponent, and motivates his team to give 110% to their game plan. He then breaks down every win or loss and makes changes to next week’s game plan. For every good team there is (typically) a great coach behind them. When it comes to the baby boomers - Blame it on the recession, procrastination, lack of a retirement coach or simply bad luck. Retiring baby boomers are facing a mountain of retirement problems. The economic prosperity experienced just 5 years ago is long gone, and today’s economy is a much different reality. Many aspiring retirees who were counting on the equity in their homes as an income source in retirement, now owe MORE on their home than it’s worth. The pensions they were counting on for income are dwindling away… Just 30 years ago nearly 40% of private sector companies offered pensions with guaranteed payouts in retirement. Today, just 15% of those companies still offer a pension, and even healthy companies such as Coca-Cola and IBM have discontinued their pension programs. And, for the boomers who were counting on Social Security to fund their golden years, as of last year, this government program has begun its demise, and with it comes uncertainty as to whether or not this income source is something that anyone can truly rely on. The Great Recession is to blame for retirement plans and investments losing up to 50% of their previous value. And with the average lifespan of American’s increasing from 68 years in 1950 to 78 years in 2010, those extra retirement years will require even more retirement savings. Yet, boomers, unlike their now-senior parents, were not the best savers. Just 5 years ago in 2006, the personal savings rate of American’s dipped into negative territory, something that hadn’t happened since the Great Depression. From 1950 to 1990 the average amount of money saved by American’s each year was almost 9% of their after-tax salary. However, in the late 80s, that all started to change, around the time boomers were entering middle-age, and coming into their better paying working years. Consumer credit scores were introduced around that time, allowing lenders the ability to quickly assess the risk and creditworthiness of applicants. This led to a surge in lending, increased consumer debt and a decrease in consumer savings.