Tuesday, April 1, 2008



Today’s Wall Street Journal ran a front page article about baby boomers’ having to delay their planned early retirements. The Journal cited many reasons for these thwarted plans for early exits from tedious, but, in the cases the Journal cited, apparently well paying jobs, including the drop in the real estate and stock markets, the virtual extinction of defined benefit pension plans in the private sector, dwindling, or vanishing, retiree health benefits, and the increasing costs of necessities like food and gasoline which the economic cognoscenti continue to tell us are not important when calculating “actual” inflation.

All these reasons for people having to delay retirement are legitimate, but the real reason was not even touched upon by the Journal, or by most other commentators on the delaying retirement phenomenon, mostly due to our growing inability to be honest with ourselves both as individuals and as a society: People simply don’t save enough money. It’s as simple as that. There are often good reasons for not being able to save. The prices of most things, despite the anodyne reassurances of Wall Street economists, are going up, and going up substantially. Putting kids through college, not all that easy even back when I, and most of you, attended college, is now an incredibly onerous task. Taxes, especially property and payroll taxes, are way up. There is no question that it is hard for “average” people to save money, but it isn’t impossible. As my parents told me when I was growing up, no matter what you make, you can always manage to save some of it.

The real story behind the savings deficiency which plagues our society is more accurately reflected in the heart rending tale of the last couple examined in the Journal article. Ellen Minter and Jeff Bartman, a San Francisco couple who “spent 30 years in demanding, mid-six figure (Mid six figure? Is that $500,000? $150,000? $100,001? Just asking. Parenthetical comment mine.) jobs in the tech industry” according to the Journal. They had planned their retirement in excruciating detail. As Ms. Minter said, “I had spreadsheets up the yin yang.” (Yin yang?) However, when the stock market cratered, Mr. Bartman had to give up his plans of retirement. Sad, eh? Then we hear of Ms. Minter’s Lexus convertible, Chanel suits, and “1996 Cabernet they’d bought in France years back.” (1996? Couldn’t have been that many years back.) Any sympathy went out the window upon reading this portion of their tale of woe. Attention, Ms. Minter and Mr. Bartman: Had you not simply had to have Lexus convertibles, Chanel suits, trips to France, and 1996 Cabernet, you could have saved more money and the vicissitudes of the market would not have mattered all that much.

It would also help the frustrated retirees the Journal cited if they didn’t trust the advice of “financial advisors” (who in many cases entered that field after successful careers peddling shoes and fast food) who promote such well thought out strategies as putting everything in the stock market because, after all, it earns 11% per year, just like a bank account, or leveraging up to buy real estate because, after all, real estate never goes down. But the core problem is lack of savings. Saving, besides being imperative for the survival of our economy and society, is good for the soul and has a remarkably salubrious impact on one’s retirement plans.

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