From the Great Society to the Great Anxiety

Baby boomers worry and wonder these days.

They have a lot on their minds: the threat of downsizing, the need for retirement planning, the costs of sending kids to college and expenses of helping their own elderly parents.

All this is a big load to carry, even for the self-confident generation that defined American culture and politics and business ever since they were babies in the 1950s.

“We have the Great Anxiety, not the Great Society,” said a North Carolina woman, digging out a political motto from the Lyndon Johnson Administration, as she emerged recently from a session with her financial planner.

“People talk about working longer and harder without getting any extra money because they just want to stay on the payroll,” said Paul Ling, a clinical psychologist in Quincy, Mass.

“I saw a man last night who is putting in 50 or 60 hours a week on the job, and his wife is nine months pregnant,” Ling said. “There is considerable marital strain and strain in his own head.”

For baby boomers, “the American dream is starting to fray to some degree around job security and health issues,” said Ling, who is 42 and worries that managed care will cut into his own business.

But perhaps the gloom and doom are overdone. After all, the sheer numbers of the boomers, 76 million strong, will demand that the political system, and society, meet their needs.

Boomers--Americans born in the years 1946 through 1964--have significant advantages over their parents’ generation. In 1950 just a scant 9% of men and 6% of women were college graduates. But one in four boomers has a college degree.

And they are affluent--the top 20% of boomers enjoyed an income of at least $56,000, according to a special study by the American Assn. of Retired Persons.

With this solid educational and economic foundation, the vast majority of middle-class boomers can calm down a bit and take a close and reasoned look at the economic challenges they face.

The oldest ones turned 50 this year, and retirement is within hailing distance, making them pay close attention to the need to save every extra penny they can squirrel away.

Much of the retirement money amassed by the boomers will be invested according to a theme familiar to veterans of the 1960s--Do Your Own Thing. Gradually on its way out is the traditional pension plan, the defined benefit, in which a company invests the money and the worker is promised a fixed pension each month after retirement. Thousands of these traditional plans have been scrapped, and the number of workers enrolled in them has remained in a narrow range, between 39 million and 41 million since 1980.

Meanwhile, there has been an explosion in the popular defined contribution plans, in which workers set aside a share of salary, with a partial match from the employer.

Companies like them because they cost less than the traditional retirement plan. Workers enjoy them because they can decide where to place the funds, and then can take the money when they leave a job. These defined contribution plans have leaped from 22 million participants in 1980 to 42 million now, according to the Employee Benefit Research Institute.

However, the boomers are more exposed than their parents when it comes to the ultimate size of the pension. The risk, as well as the potential greater reward, has been shifted to their shoulders.

“This means a lot more people have been given responsibility for some portion of their retirement income,” said Carolyn Piucci Pemberton, an EBRI spokeswoman. The workers, not the company, must “make decisions on how much they are going to invest and how they are going to invest it,” she said.

If the investments prosper, the boomers could do a lot better than their parents when they retire. Just half the population ages 66 to 84 receive a private pension today. And among those who do, the median sum--half get more and half less--is a modest $6,000 year.

If the stock market performs well over the long run, and it has yielded an average gain of 10% a year for the modern era, boomers’ pensions from the salary set-aside programs could be generous.

If boomers insist, the same higher-risk, higher-reward strategy could also be applied to Social Security, the most important of all retirement programs for the vast majority of Americans.

By the year 2010, when boomers will begin retiring, Social Security will spend more money paying benefits than it collects in payroll taxes from workers and their employers. A massive surplus accumulated during current years when the retiree population is stable will be rapidly exhausted, and by 2030, the retirement trust fund will only be able to pay 75% of the benefits it owes.

A national debate has begun over the best way to assure the solvency of the Social Security system, to guarantee that the boomers will get the benefits promised them. A special Advisory Council on Social Security is expected to propose that Social Security funds be invested in the stock and bond markets. Currently, the money can be placed only in U.S. Treasury securities.

The debate will focus on who invests the money, the federal government on behalf of the retirement trust fund, or individual workers who pick their own stocks and bonds. These personal savings accounts (PSAs), if adopted by Congress, would be a radical change in Social Security, linking the size of the monthly benefits to a person’s success in picking stocks.

For many boomers, this could be an appealing prospect. Instead of being passive and waiting for the Social Security benefits, they could take an active role as investors to drive up the size of their monthly check. Because so many boomers have learned to be cynical about government, the prospect of individual choices can be an alluring one.

“There is a persuasive lack of trust in the idea of government helping them,” said Fernando Torres-Gil, assistant secretary for aging issues in the Department of Health and Human Services, explaining why his contemporaries are much less likely than their parents to be willing to endure high taxes for big government programs.

Anxiety is there, of course. Boomers “are not sure what the hell’s going to happen down the line,” said Torres-Gil, who is 47. “They think: ‘My God, can I really save a million dollars or whatever is necessary for a decent retirement?’ ”

Using some ‘60s jargon, he declared that many of his contemporaries are “freaking out” over these issues. Torres-Gil, a former college professor, said he often wonders: “Will my pensions from USC and UCLA be enough to meet my needs?”

But the solution for this generation is not a big, new program. Even President Clinton, taking a page from the Republican playbook, has declared that “the era of big government is over.”

Instead, the Clinton administration convened a baby boomer summit earlier this month with public officials and corporate executives trying to devise new strategies for boomer security that don’t involve anything new from the government.

The message from the summit was an old-fashioned one that the boomers’ parents could recognize: Be prudent and put money aside.

“While some boomers may believe they still have plenty of time to start planning for their retirements, those who postpone the decision to save will have a much harder time retiring with living standards that are comparable to their preretirement years,” the American Assn. of Retired Persons said in a study of baby boomer economic prospects.

The message may be sinking in, even if a bit late. Billions of dollars are pouring into mutual funds these days, and the median age of the first-time buyer is 46, right in the midst of the “first-wave” group of boomers.

Often, the boomers have got to scramble to save for two purposes at once. Because many of them married later than their parents, their children’s college education bills will come rolling in just when they are thinking about retiring.

“I’m a great example--my first kid was born when I was 37,” said Jon Robert Torp, who teaches marketing at the University of Redlands and helps design advertising that appeals to older consumers. “My kid in kindergarten is taking computer lessons after school, and I didn’t get my first computer until I was 40,” he said, marveling at the fast pace of change.

Torp believes his fellow boomers can manage to have it all. “Most boomers don’t want to age the way their parents aged,” he said, noting that the gym where he works out is “filled with a lot of guys 40 to 50” years old.

If the boomers get their way, they will enjoy good health and healthy finances well into advanced old age, bending government and private programs to their will.

“We as baby boomers tend to redefine things wherever we go,” said Melinda Halpert, 42, the membership development director for AARP. “We are a generation accustomed to having society respond to our needs.”

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Who They Are

U.S. population in 1990: 248.7 million

Baby boomers (born 1946-1964): 76.5 million

Male boomers: 38 million

Female boomers: 38.5 million

Marital status

Total households 38.7 million

Married Couples 58.9%

Families headed by women 13.5%

Families headed by men 3.9%

Non-family households*: 23.7%

* Two-thirds are persons living alone.

Education

Amount of education of boomers in United States:

Less than high school degree: 15%

High School Graduate: 30%

Some college, no degree: 22%

Associate degree: 8%

Bachelor’s degree: 17%

Graduate or professional degree: 8%

College degree or more: 25%

Ethnic groups

White: 75.2%

Black: 11.8%

Hispanic*: 8.9%

Asian: 3.3%

Native American: 0.8%

* Can be any race.

In the work force

Demographic category / Percentage who are working:

Total baby boomers: 83.5%

Men: 92%

Women: 75.2%

Women with children under 6: 21.1%

Women with children 6 to 17: 44.8%

Where They Work

Agriculture: 2.4%

Construction: 6.8%

Manufacturing: 18.7%

Transportation: 4.8%

Communications and public utilities: 3.1%

Wholesale trade: 4.6%

Retail trade: 13.5%

Finance, insurance and real estate: 7.1%

Business and repair services: 5%

Education: 8%

Health services: 10.5%

Household Income

Under $25,000: 32.1%

$25,000 to $50,000: 40.2%

$50,000 t0 $100,000: 23.5%

Median household income is $34,903

Illustration by CALEF BROWN / For The Times

Source for all charts: U.S. Census