Sitting in Kyoto gives you a different perspective on the world. It is all too easy to become insular and only take a UK perspective. Right now, wherever I look, it seems the world’s media’s take on the current financial mess is that Boomers will be the hardest hit.
The FT says that: “More than 1million Boomers have 10 years left on their mortgage”.
About 1.4 million homeowners, aged 55-plus, have at least 10 years left to run on their mortgages and on average still owe £55,046.
The generation of homeowners aged between 35 and 55 only owe the paltry sum of £92,153, over 13.4 years, suggesting a £850 a month mortgage commitment on a repayment basis.
The study concludes that: “Many Boomers are facing up to the reality of still having a mortgage debt close to or even beyond their retirement age.”
From India we learn that: “Boomers turn into the ‘boomerangst’ generation.”
On a less than happy note the paper reflects that the ‘curse’ for today’s old threatens to come in the form of financial anguish they’d leave behind for the middle-aged ‘baby boomers’ marching in legions towards retirement.
From New Zealand the headline is no less nightmarish:” Fiscal meltdown worse for older people”.
The credit crunch has brought pain to Main St. And it's likely that more anguish will be felt as the effects trickle through to jobs, property prices and returns on equities and bonds. But spare a thought for older people, who have been the worst hit of any generation. The proportion of retired people living on government superannuation had risen by as much as 10% from this time last year.
It is pretty easy to see why these headlines are appearing. Since the 50-plus own most of the wealth it is not surprising they are hardest hit when aggregate wealth decreases in value. The largest owner of property, stocks (either directly or via pension funds) and other investments are the 50-plus, so it is a no-brainer that older people are sitting on the biggest drop in value.
But, and there is always a ‘but’ the world’s financial problems are the first phase of the recessionary problems. The larger problem is the “real world” recession that is lumbering over the horizon. This will have a disproportional impact on employees rather than retirees.
When we move into this second phase it will be those with wealth (older people) having the most resilience. Hoards of younger people are only a few pay checks away from financial armageddon. With virtually no savings and not enough time to build equity in their homes and investments, they are in an exposed position. Watch this space! Dick Stroud
2 comments:
Hi Dick,
Interesting post, thanks for sharing all those worldwide headlines related to Boomer angst.
It seems to me the Boomers who are going to be in the worst shape are the single Boomers, and we have a significant number of them - all types, from never-married or in any sort of significant relationship, to divorced and widowed.
I found the concept of communal homeownership, which TIME wrote about and dubbed "co-ho living" to be something that MAY help single Boomers get through our recessionary problems.
Any of your readers who are interested in learning more about the concept can read more about it in the post I've linked to my name.
Hope you'll give this concept some thought for a future post.
Meanwhile, keep up the good work!
Anne
Anne
I did the thing I always moan about others doing - generalising. You are right; within the boomer age cohort their will be a large range of 'pain' from the recession. And yes, single boomers, especially those who had to split their asset base because of divorce/separation will be hard hit.
I think the concept of co-ho living is a fascinating one. I have talked to one of my clients about creating a service that will take all of the hassle out of a group of people deciding to pool their resources in communal homeownership. I am sure that it will become a route that more and more boomers consider.
Really like your blog.
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