Many Boomers Will Face
Bleak Retirement Years
By Keith Hinson
NASHVILLE, Tenn. -- As America's oldest baby boomers continue their advance into middle age, an increasing number of observers warn many are likely to face economically bleak retirement years.
Boomers are "much less prepared financially for their retirement years than earlier generations," declared Robert C. Pozen, for example, managing director and general counsel of Fidelity Investments, who cited a study by the Investment Company Institute -- a national association of more than 5,000 mutual funds -- in testimony he gave to the U.S. Senate Finance Committee.
"It is well known that the personal savings rate in America is low," Pozen said. "The rate was 8 percent in the 1960s and now is roughly 4-5 percent."
The National Center for Women and Retirement Research has sounded a similar caution.
"Research has shown that baby boomers are at severe financial risk for retirement unless more educational incentives are undertaken to encourage greater financial responsibility," according to a statement by NCWRR, based at Southampton (N.Y.) College. "Historically (boomers) have been characterized as poor savers and big spenders."
Some analysts have wondered not only about the financial viability of boomers during their retirement years but also a possible decline in income for churches during the same time frame.
Ron Blue, a widely published writer on Christians and their finances, said the church itself is not in jeopardy.
"What God wants to get done will always get done," Blue declared. "God is not dependent upon my financial resources or me or my money. God is not going to lose, and the churches are not going to lose. But people who do not give are going to lose.
"The key to financial planning is to recognize that God owns it all and then act like it," Blue said. "The issue is whether or not those of us in the church are going to experience what God has for us in being a part of his plans and helping fund what he wants done."
Harrell Cushing, director of stewardship and Cooperative Program promotion for the Alabama Baptist State Convention, acknowledged some studies "indicate the major givers to churches today are 55 and older. However, I want to sound a note of positive affirmation for baby boomers who are faithful tithers and givers.
"Many of them have found the joy of faithful stewardship, and I think more and more will as they come to terms with these issues. I sense the feeling among some of them that material possessions and money are not as important to them as it was to their parents."
Cushing said the Alabama convention has set a goal to have one or two trained money management consultants in each association statewide. "We're just about there, and I think we have a tremendous opportunity to train the younger Christians."
Another factor that may reduce the standard of living for baby boomers' retirement years is massive credit card debt, said Jack Wilkerson, a counselor with Christian Financial Concepts' (CFC) network of volunteers.
"I counsel with couples in their late 20s and early 30s who are anywhere from $10,000 to $30,000 in debt," said Wilkerson, who is vice president of business and finance at the Southern Baptist Convention Executive Committee. "That's an incredible amount of debt for someone that age, and that's just the net debt. Often, they've paid off that much already in their working lifetime."
Wilkerson poses a question to young couples about their future financial freedom or bondage: "When you reach age 40 or 50, do you still want to be paying off credit cards with high interest rates -- or would you rather be able to comfortably send your children through college, help your children buy a home or even consider another career yourself?"
Wilkerson often refers people to a saying frequently used by Larry Burkett, founder of Christian Financial Concepts: "We spend money we don't have to buy things we don't need to keep up with people we don't like -- or even associate with."
Many financial analysts say boomers should not plan to rely primarily on the Social Security Administration for retirement income since the system has long-term problems of solvency. Even Brian Coyne, SSA chief of staff, acknowledged in a 1996 speech that Social Security fund assets will be exhausted by 2029 if changes are not made.
"Boomers may never see a dime of Social Security," Blue cautioned. "Do your planning as if Social Security didn't exist, and don't ever count on it as the means for retirement."
Cushing said he believes Social Security will survive but still advocates additional personal savings. "I'm not a doomsayer, and I don't agree with those who say the U.S. government is going to let the system fizzle and fail. I think the government will do what is necessary to make sure Social Security is a bona fide benefit.
"But it needs to be seen not as a total resource but as a supplement to retirement income. If you're going to try to live on Social Security, you're going to be in serious trouble -- whether it's today or 50 years from now."
Blue suggested boomers (and others) need not just good retirement savings but also savings for possible emergencies in the near future. "If you were in an ideal situation, I think you would have three months of living expenses set aside so that regardless of the 'worst-case situation' you would be able to live for three months if you had zero income."
Wilkerson advocates aiming for a three- to six-month cash reserve and a savings rate of 10-15 percent of gross income. "Some of that can be split off into retirement savings, which can be savings tax-free."
Some boomers may be so deeply in debt that savings seems impractical or virtually impossible, Cushing noted. "If you can't save 10 percent, I would say save what you can. In money management workshops, we don't try to set an impossible savings goal, but we do encourage participants to move toward a better percentage of savings."