Boomers Go Bust

MANIFESTO

A study released by the Center for Economic and Policy Research painted a bleak picture of retirement prospects for baby-boomers:

“The median household headed by those between 45 and 54 in 2009 will have about 25% less wealth than the median household of that age in 2004, according to the report. That household's wealth will decline to $113,268 in 2009, from $150,113 in 2004.”

The study alleges the culprit has been a lack of savings plus a willingness to tap home equity. Even without further housing declines, for a number of boomers getting rid of the house won’t solve the problem:

“After deducting 6 percent for transactions costs, 13.7 percent of the homeowners who were in the middle wealth quintile will have negative net equity after selling their home.”

All in all it’s a scary prognosis not only for baby-boomers but the subsequent generations. The combination of declining wealth and spiraling inflation as people enter retirement is going to mean a greater reliance on social programs; and an increase in funding for social programs and the sky-rocketing federal deficit is going to mean greater pay-roll taxes for the rest of us.