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Who Moved Baby Boomers' Financial Rock?

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By STEVE OTTO

The Tampa Tribune

Published: July 16, 2008

You don't think about things like retirement when you're starting out on that first job. Oh, someone from human resources sends a notice telling you the benefits of the company thrift plan and maybe you sign up, but you don't give it much thought.

Most baby boomers, who are now beginning to realize that those distant golden years aren't so far off, are now also discovering they might not be so golden.

Times change, of course. When I started down here at the Type and Gripe Factory, pay was ... well we weren't quite on food stamps. Most everyone in the newsroom would now and then find the need to float a loan from the credit union. The deal was, for every 50 bucks you borrowed, you had to have a signature from another person in the newsroom. If you needed $300, you had to come up with six signatures. Everyone kept an eye on everyone else.

The Golden Years

As for retirement, every now and then there would be a notice advising us we needed to save. The idea was we would probably need somewhere around 70 percent of what we were earning to make it through the retirement years. As most of us were struggling as it was, that didn't seem too reasonable, but we were newsmen, not financial planners.

I read the retirement bulletins and the periodic announcements that would come out of our human resource department. It was probably pretty much the same where you worked: always encouraging you to save.

Millions of boomers are now in thrift plans, a lot of them the so-called 401(k) plans. I've been watching mine shrink along with the market for about a year now. Very comforting stuff.

Then earlier this week, we ran a story from some financial experts, I think it was Ernst & Young, who said their surveys indicated a lot of people heading into retirement would be likely to outlive their savings.

Not only that, their suggestion was that instead of retiring with 70 percent to 80 percent of your income, you really needed at least 100 percent or maybe even more. Oh, yeah, right.

The Oregon Trail
A few years ago Mother Trib sent me out on the Oregon Trail to write about the sesquicentennial of that monumental migration. It had been 150 years since those thousands of brave Americans had left from points along the Missouri and headed west. You can still follow their trail and literally see ruts in the road where the wagons lurched through the mud.

One of the markers along the 2,000-mile route was a huge outcropping called Independence Rock in central Wyoming. The idea was you had to make the rock by early July or you would not be able to reach the mountains before winter and would be in trouble.

I wonder what would have happened if someone had moved that rock 500 miles to the west? Imagine the hopelessness of the pioneers who showed up just as it was beginning to snow.

Well, I'm beginning to think the so-called financial planners have moved our retirement rock. The 70 percent solution no longer works and now millions of boomers are being told they can't retire unless they are bringing in at least as much as they were while they were working.

For the boomers, it is no longer July. It is September, and somebody has moved the rock.

Keyword "Otto Graphs" to read and comment on Steve Otto's blog.

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