March 27, 2009
Written by Cory Chandler
The recession has crimped the retirement dreams of America’s aging Baby Boomers – and that may be a good thing for the economy, said a noted financial planner and Texas Tech University professor.
Sagging housing prices and a skittish stock market have created a perfect financial storm for a generation prone to spending rather than saving, wiping out home equity and retirement plans that many Boomers were counting on as they crept up on retirement age.
Deena Katz, an associate professor of personal financial planning at Texas Tech University, said the unstable financial climate has made at least one thing fairly certain: Baby Boomers will keep working beyond retirement, which isn’t necessarily a bad thing.
“These people have years of education and knowledge we can’t replace,” she said. “Right now, if all the Boomers retired, we wouldn’t have enough workers in place to replace us anyway.”
Katz, herself a Boomer, is president and a partner of Coral Gables, Fla.-based Evensky & Katz Wealth Management. She recently testified during a fact-finding hearing of the U.S. Senate Special Committee on Aging as Congress considers ways to help mend the Boomers’ parachute.
She cautioned legislators may need to adjust existing policies to make it easier for Boomers to remain in the workforce; for instance, easing restrictions that keep working retirees from accessing benefits or adjusting healthcare plans so that small companies aren’t penalized for taking on older workers.
“We Boomers are going to keep working, and we need to make sure the government doesn’t step in our way of doing it,” she said.
Granted, many of the problems faced by Boomers are self-inflicted, she said; too many of them have been happy to forego savings deposits in favor of the next new gadget, she said.
“Boomers are wearing their assets,” she said. “They’re driving their assets. They’re big consumers.”
Complicating matters even further, many Baby Boomers decided to have children late, meaning they are paying college bills while trying to sock money away and foot medical expenses for their graying parents.
“We started out with not enough money to begin with and then we had an economic hit. That’s something we’ve done to ourselves. What has happened to us in the last two years has just added to that situation.”
Katz suggests improving financial literacy education as a way to avoid such situations in the future, teaching fiscal responsibility to young adults and even children beginning as early as grade school.
CONTACT: Deena Katz, associate professor, Division of Personal Financial Planning, Texas Tech University, (806) 742-3031, or firstname.lastname@example.org.