Can the Boomers Retire?

Christine Romans interviewed me this morning for CNN American Morning. A one-on-one interview running more than five minutes on a national cable network is a generous allotment of time, but it barely skims the surface of the weighty topics at stake. Still, I can’t complain. The interview provides a nice introduction to the “Boomergeddon” book.

The Bacon bottom line: 2/3 of Boomers are financially unprepared for retirement (our friend Groveton is a relatively rare exception) and will have to work longer than they ever anticipated. We can’t count on government to act responsibly enough to preserve the integrity of Social Security and Medicare, so we’ll have to add to savings to offset the risk of cutbacks to the retirement safety net.

And how do we do that? Strip the costs out of our lifestyles to lower our spending profile, pay down debt, become as self reliant as possible — and don’t count on the government to bail you out. You’ve got about 15 years to work on it. Good luck!

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23 responses to “Can the Boomers Retire?”

  1. Awesome Interview Jim! Sorry I missed it originally.

    Your interview, appropriately, kept circling back around to the concept that people may well have to work longer than they intended.

    Which is the perfect metaphor for why the Medicare and SS problems will run into serious problems – primarily because of the Boomergeddon-illustrated demographics.

    Social Security is an INSURANCE program base on the premise that it was designed to pay retirement benefits if you lived longer than the demographic-expected age of 65.

    You'd pay into it your whole life and if you died before you could collect – all your heirs got was a $250 death benefit but your spouse did get survivorship benefits.

    If you lived LONGER than age 65, even if your benefits far exceeded what you paid into the program – it was okay – actuarially – on the same basis that your premium or private life insurance was based.

    But… when people started living longer than age 65 – on average – the fundamental promise of social security and Medicare was fatally compromised.

    It's also fair to note that for most of the 60+ years the FICA Tax not only paid FULL social security benefits AND Medicare, it actually generated a surplus so as long as we all never lived on average longer than 65 – the program itself would have been sustainable – forever.

    Unfortunately – many folks have conflated the problem we have with spending more than we take in – in income taxes on the general budget – with the FICA funded social-security and Medicare.

    My view is that we cannot start to agree on what possible solutions are – to both – until we can agree on what the actual problems are with regard to FICA and the Income Tax and the things they respectively fund.

    but THANK YOU for the video and you gave a very good account of your book and it's premise.

  2. Loudoun Insider Avatar
    Loudoun Insider

    Sobering, but all too true!

  3. Hey, I found EMR's village. It's not in America though.

  4. Jeez, zapped again.

    What did I do this time?

  5. "No matter how many cheery long-term statistics he produced, he couldn’t get as much attention as the gloomy Malthusians like Paul Ehrlich, the best-selling ecologist. Their forecasts of energy crises and resource shortages seemed not only newsier but also more intuitively correct. In a finite world with a growing population, wasn’t it logical to expect resources to become scarcer and more expensive?

    As an alternative to arguing, Julian offered to bet that the price of any natural resource chosen by a Malthusian wouldn’t rise in the future. Dr. Ehrlich accepted and formed a consortium with two colleagues at Berkeley, John P. Holdren and John Harte, who were supposed to be experts in natural resources. In 1980, they picked five metals and bet that the prices would rise during the next 10 years.

    By 1990, the prices were lower, and the Malthusians paid up, although they didn’t seem to suffer any professional consequences."

    John Tierney

  6. As gas replaces dirtier fossil fuels, the rise in greenhouse gas emissions will be tempered, according to the Department of Energy. It projects that no new coal power plants will be built, and that the level of carbon dioxide emissions in the United States will remain below the rate of 2005 for the next 15 years even if no new restrictions are imposed.

    Maybe something unexpected will change these happy trends, but for now I’d say that Julian Simon’s advice remains as good as ever. You can always make news with doomsday predictions, but you can usually make money betting against them.

    John Tierney

  7. The future shape of America is being driven not by quality of life or economic success but by the obscure rules regulating local land use. In a sense, the anti-regulation crowd is right that the laissez-faire attitude of the South and West explains their recent growth. But the usual argument focuses on the wrong regulations. Housing regulations, more than those that bind standard businesses, explain the Sun Belt’s population growth. If New York and Massachusetts want to stop losing Congressional seats, then they must revisit the rules that make it so difficult to build.

    Ed Glaser on regional econimc trends


    Where has he been? I've been saying this for years, and Im not even a PhD.

  8. The median sales price for a home in greater Houston is $159,000 and in Atlanta $113,000. The comparable figures for New York and Boston are $470,000 and $367,000, respectively.

    Housing in the growth regions is inexpensive, both in absolute terms and relative to those areas’ incomes. People, perhaps unsurprisingly, don’t seem to be putting great value on humid Houston weather.

    But those low housing prices actually provide a vital clue about why Arizona, Georgia and Texas are growing. These states have built hundreds of thousands of homes despite having low housing prices. Connecticut, Massachusetts and New York have high prices but far less new construction.

    Ed Glaser

  9. Larry G Avatar

    Arizona, Texas, Georgia and Florida are ALL serving new growth with ….new toll roads – rather than gas tax increases.

  10. I never saw any tolls in Arizona, or any backups that suggested the need for them. If there are tolls they must be so localized it would be easy to get a cheap house and avoid them.

    Surely, it is total costs that make a difference, and there are plenty of websites that help analyze that, before you make a retirement move.

    Not surprisingly, they geneally calculate Total Costs as productions costs (living costs) + externalities + government costs.

    I don't see the point of your comment, other than the usual blind blather about tolls. Tolls offer none of the benefits of a properly calcualted gas tax, and a much narrower base, and higher costs.

    Most economists advocate higher gas taxes as opposed to tolls, and even those that advocate a mileage tax, offer many adjustments to make it operate more like a gas tax.

    There is simply nothing good to be said about tolls, other than they will allow some poeple to avoid the new tax. In the larger view, they have little to do with the growth of some states combined with inexpensive and largely less regulated housing.

    As I pointed out previously, we have the right to travel, but not the right to trespass on private property. If we give ourselves over to the tyranny of tolls, we will have given away our right to travel freely AND the right to control (or mamnage) what it costs or how to pay for it.

    Of course, if you are advocating only government run tolls, on government owned property, that is a little different, but even harder to justify.

  11. Larry G Avatar

    " Legislators in Arizona are considering plans to convert some of the state's highways to toll roads in an effort to boost the state's transportation budget."

    the point is that in the states where housing is cheaper and as a result they are getting residential growth – they don't have a way to fund new roads so they are building toll roads.

    Toll roads – over time will make it more and more expensive to live further away as each mile further will cost you additional money.

    If you want to live where the housing is cheaper – it's going to cost you in tolls, additional time and .as gasoline goes up – higher fuel costs.

  12. Larry G Avatar

    re: " we have the right to travel,"

    but not for free.

    and not for cheap.

    when you fly on a plane for instance, your ticket pays for fuel and infrastructure.

    same for rail and roads.

  13. If you want to live where the housing is cheaper – it's going to cost you in tolls, additional time and .as gasoline goes up – higher fuel costs.

    Not necessarily. As Glaser points out some Houston counties have a much higher popeulation density then Westchester County in New York. If more population density results in lower infrastructure costs, then travel costs should drop, not increase.

    or can we abandon that farcical idea, now?

  14. Legislators in Arizona are also considering cutting off payments for some transplant procedures.

    Maybe they should have transplant tolls, instead.

    My point is that tolls or no, housing is such a huge cost that TOTAL costs will be lower in those states. Evidence for this lies in the fact that housing prices are a lower proportion of median income.

    Also in the fact that residents of those places have more take home disposable income, according to a study also published by Glaser.

  15. Larry G Avatar

    " If more population density results in lower infrastructure costs, then travel costs should drop, not increase. "

    where would you get the expanded infrastructure from in areas of higher density?

    Isn't that the problem in NoVa and other places of increasing density?

    these places are just doing the same thing that NoVa did – early on – with people going further and further out to find cheaper housing – while maxing out the roads – that cannot be easily expanded where growth has already occurred and ultimately will be tolled just to reduce the SOLO driving.

    the only thing really different is that they are just now starting to do what NoVa did – decades ago – with the same problems waiting to happen.

  16. Technological advances over the next decade could pave the way for the realization of one of the most staggeringly complex computer projects ever conceived: a “planetary simulator” with the ability to simultaneously model everything from the spread of infectious diseases to the behavior of financial markets, a European scientific group developing the idea suggests.

    The project, dubbed the Living Earth Simulator, would act as a “knowledge accelerator” — the social science equivalent of particle accelerators like the Large Hadron Collider, said Dirk Helbing, professor of sociology at the ETH Zurich Swiss Federal Institute of Technology and chairman of the FuturICT project, which is seeking funds to build the simulator.

    In the case of the planetary simulator, thousands of streams of real-world data would be brought together to reveal previously unknown patterns and trends in human society.

    “It is time to explore social life on Earth, and everything it relates to, in the same ambitious way we have spent the last century exploring our physical world,” Dr. Helbing writes at the group’s Web site.


    many smaller-scale social simulations have already been created in Europe and “vast sums” are being spent on the development of new models by the Department of Defense and the Department of Homeland Security in the United States, Steven Bishop, a mathematics professor at University College London and a coordinator for the project, told a scientific conference in October.

    Advances anticipated in computer hardware and software in the coming decade will allow for “zero-delay reality mining,” the collection and processing in real time of data from infrastructure sensors, sensors in mobile devices, Web pages, search engines, online social networks and many other sources, which would be needed for the program’s crisis prevention function, Dr. Bishop said.


    This is one way such things will be evaluated. Notice the emphasis in this model of data collection and visualization.

    I'm not even a PhD, and I have long advocated that such a collection of nowledge will make it harder and harder to disseminate opinion as if it was truth.

    There will be many streams of information pouring into the various right hand terms, but the core of this simulator will look pretty much like Total Costs = Production Costs + External Costs + Government Costs.

    Wikipedia, for example has its problems, but as a distiller of consensual information it is different from the toxic waste dump that the vast store of Google information represents, and which can be mined to support any agenda.

  17. Theoretically, higher density should result in more use, and less coss per use and less cost per mile, whehter it is sewer or roads.

    Unless the engineering and acquisition costs outstrip the cost reductions of economy of scale.

    As I have pointed out before, the forty year history of Loudoun Vs Fauquier, strongly suggests that the Total Cost of increased services in Loudoun County are more than offset by increases in income and wealth.

    Those benefits apply to everyone, so there is no reason why the costs should accrue only to necomers.

  18. Are you telling me that you disagree that increased density will lower our costs and improve the environment?

    When you fly an airplane, your fuel costs include a tax that supports the infrastructure. In addition various airpoerts impose landing and service fees that amount to tolls. The result of these charges, and more efficent small planes, is that more flights are moving to regional or secondary airports.

    In addition to these tolls, flight slots are auctioned off, like frequency spectrum or SO2 pollution rights. Such auctions are equivalent to congestion zone charges, and further divert flight to other airports.

    If you are going to use air travel as an analogy, be sure to include the whole system, ,and the results.

    It makes no sense to say we need strong building codes and regulation to prevent sprawl extraordinary infrastructure costs, and then turn around and create various density costs that encourage sprawl and relocation.

  19. " same for rail "

    You are kidding, right?

    Metro riders tickets pay around forty percent of costs, and many costs are already being delayed, so as not to show up, yet.

    When I rode VRE I felst positively GUILTY that my $6 ticket required and addittional $22 outside subsidy.

  20. Imagine if you could go to the simulator and just ask "Can the Boomers Retire?" and it would come back and tell you "yes" and predict where they will retire and at what costs.

    It would make Glaser as obsolete as modern weather data collection and forcasting has made the rain dancers.

    Such a thing would render dark predictions like Boomergeddon or EMRs resource rants either a lot less believable or a lot less expensive.

    Or else a lot more believable and therfore more motivational. But in that case, it would also outline the most workable solutions, and eliminate quack solutions.

    Even if it is not perfeect for a long time, like the weather forecasting system, at least we won't get hit by entirely blind events, like the 1886 blizzard.

  21. " Urban planning jobs are now scarce and seem to be getting scarcer. This is mostly because of continuing troubles in the real estate market (without projects being proposed, there's no need for planners) and fiscal problems at public agencies (keep in mind it can take years for tax revenues to filter down to the local level– in many places, the full force of the recession is only beginning to be felt by local governments).

    If there's federal funding, the job prospects are slightly better for urban planners. Most of the federal projects involve transportation, so these jobs tend to be limited to transportation planning or environmental planning, and most of the positions are at large engineering firms."

    Sorry, I lost the link.

  22. All I can tell you is that one pigheaded and overtly cynical decision by county officials twenty years ago robbed my wife and I of the opportunity of a comfortable retirement, and as far as I'm concerned broke their word as well.

    No one benefited.

  23. Kid Rock Tickets Avatar
    Kid Rock Tickets

    I love it! Can't wait for the conference too, it's going to be great. And I'm 100% with you on the boob sweat. It's just plain unnecessary!

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