With Retirement Portfolios Decimated by the Bear Market, the Boomers Won’t Leave the Stage

A funny thing is happening to the American economy.

Remember all those stories with the dire predictions of labor shortages as the oldest of the baby boomers retire and Generation X, at half the size, not being able to fill all the job openings?

Surprise!

The Baby Boomers aren’t retiring after all.

And those that already have, are re-entering the workforce after the market collapse shredded their portfolios and the housing bust decimated the value of, probably, their largest asset.

In some cases, 60-year olds are competing against their 25-year old children for the same jobs. And, sorry to say, with the changes in technology, if you’ve been out of the workforce even 5 years (let alone 25), you’ll be at an extreme disadvantage.

From the New York Times:

It has been a humbling time. Mrs. Diamond, who has a master’s degree in library science and was chairwoman of the library committee at her sons’ school for a decade, is applying for work with a 25-year gap in her résumé. “On one application, there was a whole page of databases I didn’t know and had to leave blank,” she said.

In November, Mrs. Diamond and Matt, whose major at Johns Hopkins was neuroscience, were vying for the same job, a research analyst for a pharmaceuticals company — until she withdrew. “As a mother, I felt it was more important for Matt to get his foot in the door,” she said. It didn’t matter; the position was frozen. No one was hired.

Then there are those Baby Boomers who are in need of jobs because the housing “dream” didn’t quite turn out as they thought it would.

Shouldn’t they own their houses outright by now?

Forgive me for sounding harsh, but if you bought a home in your 30s and you’re now 65 or 70, shouldn’t you be sitting pretty?

But apparently there wasn’t as much “downsizing” during the boom, but instead “up-sizing” as many Baby Boomers bought retirement homes worth far more than they should have thinking that real estate only goes up.

And now, they’re sitting on a declining asset as well as a high mortgage payment at the very same time that their 401ks have declined sharply.

Both of my grandmothers, aged 89 and 90, respectively, have owned their homes outright for decades. They were of the Greatest Generation- those that saw the Great Depression and World War II. Most of them didn’t mess around with re-financing or buying bigger houses or vacation homes as they got into their 70s and 80s.

But the Baby Boomers had no fear.

And now, what do they do?

They are trying to re-enter the workforce. Fully 1 in 10 of those in their 60s believe they will never retire. And nearly 30% believe they’ll work well into their 70s.

This will have a dramatic effect on both Generation X and Y- both of which need the Baby Boomers to exit the stage in order for them to advance.

Could there be generational warfare in the future as each group fights for limited resources?

In the New York Times piece, if you were a recruiter at that pharmaceutical company, do you hire the older worker who hasn’t worked in 25 years or do you hire the young college graduate who at least knows what Twitter is?

That is the reality.

The Baby Boomers, which enjoyed several of the greatest bull markets (in both stocks and real estate) the country has every seen, didn’t capitalize much on those bull runs. There’s no way of calculating the ramifications of this. But we do know it probably won’t be good.