|
Will to save lacking in many boomers
(Richmond Times-Dispatch (VA) (KRT) Via Thomson Dialog NewsEdge) Dec. 29--The generation that couldn't trust anyone over 30 is now a lot older than that. Most are north of 50.
Yet, many act as if they are still starting out in life. They carry credit-card debt.
Plus, nearly a third -- or 25 million boomers -- have less than $10,000 in cash or funds for retirement, said Matt Thornhill, founder and president of The Boomer Project, a marketing, research and consulting company in Richmond.
People in this category cut across all income and age levels, Thornhill said. Boomers were born between 1946 and 1964, so the youngest are 43 and the oldest are 61.
"All they have is equity in their homes, if that," he said. "Boomers are good spenders, not good savers."
"Basically, a quarter are well-prepared and ready to rock'n'roll into retirement," Thornhill said.
"Another quarter are in horrible shape. And 50 percent are in the middle. They think they are prepared, but they are spending more money than they are making."
What's more, the huge transfer of wealth that was supposed to occur when boomers received their inheritance is fantasy, he said.
An estimated $41 trillion has dwindled to $7 trillion, as boomer parents live longer and spend their savings on health care, Thornhill said.
"A surprising number of boomers think Social Security and their savings will be enough," Thornhill said. "But what if they get ill and can't work? What will they do then?"
They are not the only ones in trouble, Thornhill said. "We all are."
Most boomers are oblivious, he said. "The biggest fear for boomers is themselves."
Some people in their upper 50s are quitting their jobs, cashing in on 401(k) savings plans and buying RVs, yachts, second homes and/or big houses in the suburbs and all the stuff to go in them, Thornhill said.
"It's sickening," he said. "Our parents knew about compounded interest. Why don't the boomers?"
Thornhill predicts that reverse mortgages will be a huge business in the years to come, as boomers run out of money and borrow against the equity in their homes.
"A reverse mortgage is a great entitlement for seniors," said Bob Shahda, branch manager of Seniors First Mortgage in Richmond.
"They are too good to be true. There is no downside, yet most people don't know about them."
Reverse mortgages are federally backed. To be eligible, people must be 62 or older and they need at least 50 percent equity in their home.
"People still own the home and, unlike other loans like a refinancing, there is no risk of foreclosure," Shahda said.
Basically, a reverse mortgage is a line of equity that can be drawn against as needed, in a lump sum or in monthly amounts. If more is owed than the value of the house when a borrower dies, then insurance covers the difference.
About 16 percent of boomers would consider a reverse mortgage to take care of their long-term care needs and costs, according to a recent MetLife Mature Market Institute survey.
It may be their only recourse, besides work.
"Despite the economic power of boomers, many aging ones face the prospect of shattered expectations," according to The McKinsey Quarterly, a business journal.
By 2015, "new McKinsey research reveals that 60 percent of boomers won't be able to maintain a lifestyle close to their current one without continuing to work."
Also by 2015, more than 45 million U.S. households will consist of people 51 to 70 years old, up from 25 million for the previous generation.
Contact Carol Hazard at (804) 775-8023 or chazard@timesdispatch.com.
To see more of the Richmond Times-Dispatch, or to subscribe to the newspaper, go to http://www.timesdispatch.com.
Copyright (c) 2007, Richmond Times-Dispatch, Va.
Distributed by McClatchy-Tribune Information Services.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
[ Back To SIP Trunking Community's Homepage ]
|
