Baby Boomers

Fwiw:

http://www.law.yale.edu/documents/pdf/Hacker_PoliticsOfRiskPrivatization.pdf


OTH regarding the studies you mention, usually the academics study everything. When I want to research a difficult topic I google a college name and the key words, this usually bring up some results.

Very interesting point though about the taxing of 401k's in the future. Another poster had mentioned reverse mortgages as a solution, which I think is an excellent option but not widely available. We need to think in terms of income streams rather than lump sum sell outs (ie real estate) with hopes of preserving the principal.

The selling of assets to fund medical problems (ie short term assisted living) is you might get better. Then what? You are a broke ass pauper with no where to live except subsidized housing.
 
"Most of the money will likely go for health care and nursing home. I have a relative in one now... costs about $6500/mo. When all of his assets are consumed, Medicare will take over his costs."

Assuming it is so. How about a what if?

Maybe a co-op assisted living facility. You buy your bed. Say you buy a bed 100k, your monthly payment is based on your level of care and the size of your deposit. You maintain equity to resell.

The pool of money from everyones "down payment" is invested.

Then your assisted living facility is specialized care. Let say, broken hips (think dude ranch lol). Then you enlist investments from Doctors who work in this field and participate in the care of the co-op residents.

Any thoughts?
 
I'm kind of chiming in on two posts here.

I agree that baby boomers will stop buying, and start selling their stocks...bad for the stock market. Also, another point is that they'll cut consumption...also bad for the stockmarket.

What will be interesting for a "tweener" like me...just younger than the boomer generation...is that the stock market will stagnate, or even retrace at the tail end of our retirement.

So I have a lot of friends my age (early 40s) who go to financial planners and they are told to buy mutual funds. They ask about diversification, and they are told to buy foreign stocks, of which most are held by American investors. Then, the planner sits down and the conversation goes like this: Ok, you want to have $40,000 a year when you retire, so you'll need roughly $800,000 in assets. That means, since you're age 40, if we assume that the stockmarket will double every 8 years, you'll need to put $500 a month into mutual funds (or whatever). So there are all these people my age buying mutual funds.

But I think when the number of boomers hindering the market exceed those helping it, the market will start to tank and there will be a ton of tweeners, like me, who expected their money to double one last time...and it won't. The smart ones will figure this out first and seek out alternative harder investments (i.e., real estate, commodities, etc.). The rest will be left holding the bag and hoping on Generation Y demographics to bail them out.

To some extent, I think this is happening. Being a contrarian, I'll be trying to assemble a real estate portfolio that would be attractive to Generation Y when I'm ready to sell. Then when the stock market tanks and everyone goes looking for alternatives, I think it would be wise to buy back into the stock market again. This will take place over a number of years...perhaps more than a decade.

SM
 
Hi -

First time poster here. I found the board because someone at the start of the thread linked to my article on the Fourth Turning.

Here:
http://www.bullnotbull.com/archive/fourth-turning.html

That is kind of a follow up to my article last week on Dow 13K, Inflation, and the Second Great Depression, here:

http://www.bullnotbull.com/archive/dow13k-1.html

I've been thinking a lot about these issues myself, so I'm happy to find this thread. The Fourth Turning is an amazing book because it talks about generational changes. Every 20 years or so a big change comes about -- completely unexpected -- because a new generation comes of age. We're due right about now.

What seems clear to me is that we have to have some kind of a paradigm shift. The current system is simply unsustainable. We can't all pay 6,000 per month (each!) to house our aging parents. Some might be able to afford it, but not everyone, and not for long.

The hard part is trying to imagine what a new system would look like. Likely it will involve the extended family moving back in with one another - out of necessity. As a result, much of this real estate will likely become redundant. A society of old people requires a tight knit community - so people can look after one another and walk to the store, etc. (We don't want these old people driving!)

But as one poster above noted, these people are getting crotchety in their old age. Actually I take that back - many have always been crotchety - people don't change much as they age. Crotchety young people turn into crotchety old people.

At any rate, I'm working on another article on this very topic for next week. Once it is up, I'll come back here to post a link, or you can find a 'subscribe' button on my site to be notified by email when it is up.

One thing I know for certain: we're in for some big, unimaginable changes in the future. :confused:

Michael
 
I think the boomer generation will pay extra attention to politics and use that voting power as a tool to direct government money in certain directions. One direction that comes to mind is healthcare and health sector companies. Might not be a bad idea to have good exposure to companies in this sector for the long term.

Otherwise SWHC!! Old guys robbing banks!!
 
Hey - thanks for posting the link to part II of my article. I caught a lot of flack from Imus-wannabes, sending me emails of venom for Part II.

I am not so much anti-Boomer as I am trying to figure out what is going on. Boomers will pass from the cultural spotlight, but how will they respond? From the emails I got, it does sound like a real generational *war* is shaping up:

Boomers seem to think the younger set is clueless and stupid (judging from the emails I got). Young people see no need to support Boomer's healthcare system when they can't even get healthcare for themselves! Not a pretty picture.

Something somewhere has got to give, and I'm starting to think it might not be such a good idea to be in the US when it does...


Michael Nystrom
 
Several posters mentioned more reverse mortgages in the future. This article from seeking alpha is quite interesting. I think we'll see innovative types of equity extraction to assist the boomers.

***********************

From seeking alpha


Just when you thought consumer home equity induced spending was dead due to a slowing market and tightened credit standards, a new product promises to put some juice into it. REX & Co, backed by a subsidiary of American International Group, Inc. (AIG), has a new product that lets homeowners tap the value of their homes without taking out a loan.

The novel product gives homeowners cash for their equity in return for a portion of the proceeds from the eventual sale of the home. For instance, a homeowner who has a $500,000 home can extract $100,000 of that by giving REX 50% of the change in the home value. So, if the home is sold in five years for $750,000, REX receives half the increase, or, $125,000. If it sells for $600,000, they receive $50,000.

It is a break from the traditional debt based equity extraction option homeowners currently have and is available in California, New Jersey, Virginia, Florida, Washington, Colorado, New York and North Carolina. Founder Thomas Spoonholtz expects it to be available nationwide within a couple of years.

He aims to have it sold through mortgage brokers with up to a 2% of proceeds fee and homeowners will have to commit to hold the home for a set number of years or face "early exit" fees or 5% to 25%. This approach will appeal to retirees looking to maximize the extraction of equity from their homes without incurring interest payments. Younger borrowers will like the fact that their debt ratios will not increase and the effect on their credit scores will be non existent. It will also allow for higher borrowing limits, since the home will be held for a minimum time frame, increasing the equity available.

What this product essentially does is allow current homeowners to borrow "future equity" in their homes and not pay interest charges.
 
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