Wait, It Gets Even Worse

I’m hearing the same unsettling lament again and again from family, friends and acquaintances: They were planning for retirement, they explain. No more. Now they’ll have to stay on the job until they’re 70. Or 75. Or whatever.

They were going to travel or move to the Rockies or build a sailboat or write that long-deferred novel. But now these baby boomers are contemplating another 10, 15 or 20 years at the wage-and-salary grindstone.

Considering circumstances, you have to believe that these people are more than half serious. If so, we’re headed for a chain-reaction collision of generations just around the next bend.

Today’s headlines about the flimsy, sometimes fraudulent, foundation of our boom in wealth spell out facts, though not yet the consequences. The nest eggs of millions of working Americans have shrunk by a third or more. Compared to expectations, their loss is far greater. Countless productive workers in their late 40s to early 60s had been putting the finishing touches on retirement dreams, presuming a continued double-digit annual growth of their 401(k)s. Now, instead of doubling their savings in the next few years, they find themselves dragged backward.

No, I’m not reaching for my violin to gin up public sympathy for a generation--my generation--that has zigzagged its way through the fanciful fields of self-indulgence since the 1960s, throwing its heart ahead of good sense in quest of everything from free love to easy riches. But the fallout of the boomer bust will leave no American untouched, and mostly for the worse, I suspect.

Biologists use the phrase “dominant-year class” to define a cyclical bulge in the population of a species of animals. Such a group has a disproportionate effect on resources, and thus on the lives of all fellow creatures in front of them and all those behind. The post-World War II boomers are something of a dominant-year class of living Americans and will be for the next 25 years or so.

The first of these 14.2 million employed boomers face the retirement age of 65 in less than a decade, hardly enough time to find comfort in that old nostrum about taking the long-range view of the markets. Behind them are an additional 30 million workers aged 45 to 54.

Let’s suppose for a moment that a significant number of these graying Americans now hope to forestall their retirement plans. Will they really be able to keep their jobs? Can employers afford to carry 60-year-old workers for another 10 years, paying them high-end salaries and vacations, covering their rising health insurance costs, investing in their training? If so, what about the crushing effect on aspirations of younger workers itching to rise in the firm?

More likely, many boomers will be flushed out of their careers. Corporate reform as now discussed has nothing to do with making companies more paternal, only less reckless. And our laws provide scant protection against age discrimination. So where will these workers go? And how much will they squawk while going?

You don’t have to ponder this for more than a second or two to realize that there isn’t enough Prozac in the world to prevent a boil-over of social tensions. The seeds were planted 20 years ago when employers successfully--and quietly--secured government approval to revolutionize the nation’s pension system.

Company-paid retirement plans began to be phased out, steadily replaced by 401(k)s and the like as the retirement foundation of the wage and salary work force. Recent studies show that workers ended up with the lesser end of the deal as corporations took advantage of the opportunity to reduce their pension contributions by about 18% per worker. But employees did not complain very much. Their quarterly mutual fund statements spelled out their futures in lump-sum numbers, and the markets promised only growth.

Tomorrow’s fallout is unlikely to be quiet at all. Even optimists who foresee a market recovery are realizing that they cannot realistically expect to catch up and attain the savings balances they recently counted on--at least not in time for their planned retirement. Pessimists fear that the bust will spread to housing, draining away cherished equity gains.

Quite suddenly, we feel the future pinching in, not opening up. To generalize about us boomers, we are not very practiced at what seems to confront us: a diminished tomorrow. Meanwhile, the immutable rule of the “dominant-year class” assures that everyone else will suffer too.