The Big Wave Of Aging Baby Boomers

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Couple on motor cycleWill the world be ready if or when aging boomers [born between 1946 and 1964] hang up their car keys? Most plan to stay in their suburban house even though their home may become unsuitable. It’s surprising that this huge generation is not being addressed by the housing industry.

Thoughtfully designed housing for older adults is not being created on a scale commensurate with the growing need. It’s not a market many architects or developers have embraced. Conversely, a disproportionate amount of attention has been focused on the presumed desires of millennials. We hear all the time that it’s this group craving walkability, good transit and everything-at-their-doorstep amenities — and that it can only be provided by cities.

There are a number of reasons for this: most of the people who do marketing are young. Doing stuff for old people is not fun. One marketing consultant who founded the Boomer Project noted:

It’s as if marketers all wear the same blinders. Because so many marketing executives are under 40 — or even under 30 — many presume most consumers not only think like them, but want to be like them. Most marketing that targets Boomers presumes there is something wrong with them that needs fixing, such as age spots or wrinkles. It’s malady-based. And, for the most part, it’s not accurate.

Sure, things will go wrong, but not in the order one would think

So when the companies do think about designing for those growing older, their thinking is malady-based too; by considering malady-based design issues like “step-free entrances, single-floor living, under-counter appliances, and halls and doorways that accommodate wheelchairs.”

But, by not really knowing for sure what kind of housing aging boomers need, these mobility-based problems are the last to consider; the first are household-based activities like driving, food shopping, taking medication and meal preparation. These start hitting in significant numbers in the mid 70s, and the boomers are not there yet.

These are also problems that are solved by community — being able to walk to shop, moderately priced restaurants where one can get prepared food, neighbors who might look in and check if a person is taking their medication.

Right now, boomers feel pretty good

The fact is that right now, most of the baby boomer cohort is still pretty healthy. According to a Del Webb study, they all feel a lot younger than they are, and until any health problems start hitting them, they will think they are much younger. So it should be no surprise that there are not too many of them worrying right now about giving up their cars; they all think they are fine.

Every day for the next 12 years, 10,000 people will reach age 65. That companies are not scrambling to exploit this market is not only unfortunate for their bottom line, but almost certainly treacherous, eventually, for everyone.

The power of boomers

Baby boomers buy 60 percent of packaged goods, spend 75 percent more on vacations, and buy half of all new cars. They own a third of all the iPhones and half of the Macs. Baby boomers, because they get out and vote in higher numbers, just elected the new American government and pretty much control it. President Trump is 70, Wilbur Ross, U.S. Secretary of Commerce, is 79, and the average age of the cabinet is 62. The baby boomers own America, and now they rule it.

There is an importance of living in walkable communities, those things that the millennials want, such as good transit and everything-at-their-doorstep amenities. People have to start thinking seriously about these issues, but most baby boomers simply haven’t yet. Most who have decent jobs or own businesses are not seeing any retirement barrier at age 65 either.

Technology can be part of the solution, with Uber, home delivery, apps and wearables. Summoning these cars is a no-brainer for heavy users of smartphones, but for older people with declining vision and motor skills, it’s a puzzle. But not for the baby boomers; they just upgrade to the iPhone 7 Plus and get a bigger screen. Again, conflating seniors with tech-savvy boomers who have fine, well-practiced index finger skills, along with Siri and Alexa.

In fact,  the biggest problem for boomers might well be over-reliance on technology. Most older seniors could easily park themselves in front of the television with only the 50 channels the cable company gave them. Now we can get endless streaming of Netflix and every other service to fill our time. Soon we all might be wearing Oculus headsets and never leaving our chairs.

Perhaps that is what happens when people are trapped in their homes, or when they lose their car keys. Which is maybe why we have to think community first, interior design second. And in the end, we’re talking about timing. The baby boomer demographic bulge is just getting into its senior years. As one senior living expert, Bob Kramer notes:

“Some of this is like surfing — you have to time the wave,” Kramer says. “You paddle too soon, and you wipe out spectacularly.”

The oldest boomers are just 70 or 71 now. But they are the leading edge with many, many millions to follow. We are 10 years away from the real crisis here. The question is, do we fix our cities and towns now so that they are ready for this wave, or will it drown us all?


Social Security at 80: Eight Savings Strategies

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Social Security 80

Social Security celebrated its 80th birthday on August 14, 2015. And while news about the program’s financial status is rarely upbeat, most Americans are glad it still exists especially women and lower-earning workers.

Here’s why you need to pretend it doesn’t exist: Underfunded as it is, Social Security remains a favorite political football. At the same time, we’re living longer, and our savings need to last. So whatever happens to Social Security, it’s more important than ever to use all the savings strategies at your disposal.

Here are 8 ways to do that, one for each decade of Social Security.

1. Make savings simple

Just how important will your personal savings be in retirement? According to the National Academy of Social Insurance, a non-profit group that focuses on “how social insurance contributes to economic security,”  the Social Security program replaces more than 50 percent of income for low-earning workers. Furthermore, high earners would need to radically reduce their lifestyle if they need to rely heavily on Social Security income in retirement.

The Social Security Administration calculates income replacement rates for retired workers across a range of income scenarios, from those with very low income to those who hit the maximum annual amount of income taxed by Social Security (in 2015, it’s $118,500).  Their calculations assume 35 years of contributing to the program and are based on Social Security’s national average wage index (AWI). For 2015, the average is $47,820.

If you’re lucky enough to be at a company that offers a 401(k), you may already be funneling money into it every pay period. Maybe you can even save enough to get all of the company match, if there is one. Saving 12 to 15 percent of your salary in a 401(k), up to the 2015 contribution limit of $18,000, is a very good idea.

That assumes you already have a cash emergency fund of three months at the very least. If your budget allows, try setting up automatic deductions from your checking account into other savings accounts, even if it’s just $25 or $50 a paycheck. And if you don’t notice that it’s gone, kick the contribution up a little higher.

2. Keep 401(k) savings sacrosanct 

One challenge millennials face that their parents didn’t is handling 401(k) accounts while moving jobs every two to three years. Rather than roll an old 401(k) into a new employer’s plan, many young savers just cash it out, which means paying income tax on it and a 10 percent penalty.

In the fiscal year of 2014 that ended on March 31, more than 40 percent of 401(k) participants between the ages of 20 and 29 cashed out all or part of their plan balance after leaving a job, according to Fidelity. Even for those between the ages of 40 and 49, the cash-out percentage was high, at 32 percent.

Barring a lottery win or a fat inheritance, starting to save early, so money can compound over many decades, is really the only way most younger savers are going to arrive at retirement age with a decent nest egg.

3. Wage war on fees 

This means, first, knowing what fees you are paying for different investment accounts. Many people have no idea, particularly when it comes to retirement savings accounts such as 401(k) plans. A Department of Labor rule saying plans must provide participants with fee disclosure has made that information more easily available.

Once you find that information, your plan probably won’t note whether those fees are low, average, or high compared to similar funds. You can get a rough sense of it at

4. Check your asset mix

If you have multiple investment accounts outside your 401(k), or just multiple 401(k)s, it can be hard to know what percentage of your assets are in cash equivalents, bonds, and stocks. What is the optimal mix?

Everyone’s situation and risk tolerance are different, but the asset allocation in target-date funds gives a sense of what some large investment companies think is ideal.

5. Know your risk tolerance 

To guard against getting too stressed by market swings, investors may want to separate their money in different buckets. Money can be tied to short-, medium- and long-term goals, with each bucket having a different risk profile.

6. Be an employee benefits ninja

If you’re offered a flexible spending program or the ability to pay your commuting costs with pre-tax money, take the time to learn about them. You’ll get more mileage out of your money and lower your income taxes to boot. Making the most of tax-advantaged perks is a small way to give yourself a raise in a time of stagnating wages.

Employers have been shifting more costs to employees, often through the use of high-deductible health-care plans. Companies’ adoption of such plans may slow next year, according to a survey of more than 100 large U.S. employers. Employers are waiting to see if lawmakers repeal Obamacare’s “Cadillac tax” on high-cost health coverage, which is a levy on individual health premiums greater than $10,200.

Health care savings accounts (HSAs), which go hand-in-hand with high-deductible health plans, will likely become a greater part of employee’s lives. These are “triple tax-free”—what you put in is sheltered from income tax, it grows tax-deferred, and the money can be used, tax-free, for medical expenses. Companies usually seed the accounts with a few hundred dollars, pre-tax, and your contributions are tax-deductible. You can contribute up to $3,350 for an individual policy and $6,650 for a family plan. And unlike flexible-spending programs, they are not “use it or lose it,” so your money accumulates.

7. Ignore the fancy stuff 

There are many benefits to keeping your finances fairly simple, like having a clear picture of where you stand. Unless you’re a seasoned speculator whose retirement is already more than provided for, avoid any investment with the word “leverage” or 2x or 3x (or more) in its name.  It’s been said before, but bears repeating: If you don’t understand it, don’t buy it.

8. Eat your spinach 

Health care costs in retirement are the most likely expense to send your finances into the depths of abyss. Fidelity estimates that in 2014 a couple who retired at age 65 could look forward to $220,000 (in today’s dollars) in health care costs. That number didn’t rise from 2013, but it’s still way more than most people have saved for all of their retirement.

The AARP has a pretty simple calculator, and there are many others, that will scare you into the gym if you aren’t there already. It’s like making money!