Financial gurus........

[aaron_mag]

Listening to the radio this morning they were forecasting that we will be having deficits in the near future. They also worry that in 2008 the first baby boomers become eligible for social security and in 2011 they become eligible for medicare. This future of a smaller workforce supporting a larger retired population has worried me for some time.

Any thoughts on how it may shake out? What do you think the safe investments will be?

[ShooterJM]

For investing your retirement account now? Or safe investments for a retired person in 2008 or 2011? Or how much to save for retirement period?

[aaron_mag]

I'm only 32. Not looking to retire in 2008 or 2011. Basically I'm just wondering what people are thinking for the future. Do you think that the baby boomers starting to retire is going to have a huge negative impact? Is anyone worried? Are higher deficits in store for us due to this demographic fact? What are people thinking....

[ShooterJM]

Yeah I'm not so much worried as annoyed. Poor planning, poor decision making, etc etc. Basically I don't think privatization will go through, aarp and other interest groups will complain and lobby against raising the eligibility age, so we'll probably end up with getting a 2-3% increase in payroll taxes. That'd take us out another 40 years or so probably.


EDIT: At that point most of the baby boomers will be dead so barring population increases or decreases balance will be restored. Betcha the payroll tax isn't dropped though.

[1stdeadeye]

This is my specialty!

Besides being a commercial lender I hold a Series 7 and 63 securities licenses as well as Life & Health Insurance Licenses.

First off the CBO (Congressional Budget Office) has predicted that we will be carrying deficits in the 100s of billion range for the next few years. They are talking about a surplus though within the next 5 years.

The retirement of the Baby Boomers will most definitely impact SSI, but also remember that the BBs are the recepients of the largest transfer of wealth in history (the "Greatest Generation" to the BBs). Also remember that the retirement age is being raised to 67 and will mst likely be raised again in the future.

All this being said, what are your goals?

If it is retirement and you are worried about safety, I have two words for you: Variable Annuity!!! They are more expensive then mutual funds by about 1% on average. They do have some safeguards built in though!

If you buy a Variable Annuity, do it through a strong insurer like AIG, Nationwide, Sun Life, etc.. The variable annuity is like a wrap account. It is a tax deferred retirement vehicle that you can holdmutual funds in. There is an additional cost of 1 to 1.15% involved. This is obviously a soft cost and comes from your return. What do you get for this? Peace of mind! You get a guaranteed death benefit. Let's say you invested $100k in 1995. You were very aggressive. In 2000 it is worth $450k. The market tanks and you commit suicide. The value is now only $50k. With a variable annuity, your family would receive the $450k!!! Basically what the GDB does is take a snapshot of your account on some basis (1,3,5,10 years, etc.. depending on the company). The high value becomes your GBD. This is called the "Stepped up" value. This type of product does not guarantee you income and there are market risks. What it does do is allow you to be aggressive and still protect your family!

PM me if you have more specific questions.

As for when the baby boomers retire, no I am not really worried. A great number of them will remain in the workforce out of necessity or boredom.

Think about the growth their age will encourage:

i.e. Pharmacueticals-Rx by Age 0 to 18=2-3 per year
18to 40=0-1 per year
40to 65=2-3 per year
65+ =5 per year
These are just averages. So the boom in Rx will be monsterous!

Financial Services-As I mentioned we are soon to see the largest transfer of wealth in the history of the world from 1 generation to the next. They will need help managing it.

Technology-Yes the bubble burst, but it is still a driving factor. Hell my dishwasher has a computer chip in it's control board. Technology is becoming more and more pervasive.

You will still have driving factors to grow the economy. It may be more earnings focused rather then growth focused as the BBs will want dividends to live on.

Just my $0.02

[Matt_mg]

The economy is in the ****ter because of the war...

Rather than suicide yourself (hehe), invest in something that won't go away like buildings (unless there's an idiotic market boom like in my country, it's just waiting to crash house prices are twice what they are really worth right now...)

I have a friend who works in a broker firm, he deals millions (not his of course) at a time and you know what he did last month? Bought a building LOL

[Albinonewt]

I basically agree with First Deadeye, except for the strain the Baby Boomers are going to put on Social Security and other similiar programs.

With the medicare expanasion that congress trying to push through it is clear that both Republicans and Democrats have decided to throw unlimited amounts of money at seniors since seniors A) vote more and B) are represented by one of the most powerful lobbying forces in the UNIVERSE!! (AARP). If medicare, medicaid, and social security are not reformed and fixed in the next decade or so we're going to see the failure of those programs.

Here's an intersting article from my site by my buddy :

AARP's Mac Machine

[aaron_mag]

1stdeadeye brings up some good points that make me feel a little better about the future. Many people think there will be a boom in nursing homes/assisted living in the future because of demographics as well. I worry, however, as many of these services are government funded. Will a lower tax base be able to support all these people. I suppose Albinonewt and I have the same feeling about this.

I'll have to print out 1stdeadeye's comments and read through it carefully. Might be some useful information for me in there. I also think the bubble has to burst in housing. Houses keep going in and but if the job market is not growing in an area it can't be sustained. I've got some investment in real estate (small plexes and a small office building). Hopefully these will hold their value.

On other news I went to dinner with some friends last night. I mentioned that I was debating the civil war and slavery on the web. Right away my buddy says that slavery was NOT the central issue of the civil war but economics and state versus federal power. Right away the wives shut us down and said we were not allowed to discuss anything that hadn't happened in the last year.

Have some stuff due today. Better get to it.

[Restola]

Originally posted by Albinonewt
With the medicare expanasion that congress trying to push through it is clear that both Republicans and Democrats have decided to throw unlimited amounts of money at seniors since seniors A) vote more and B) are represented by one of the most powerful lobbying forces in the UNIVERSE!! (AARP). If medicare, medicaid, and social security are not reformed and fixed in the next decade or so we're going to see the failure of those programs.

I couldn't agree more.

[1stdeadeye]

Originally posted by aaron_mag
1stdeadeye brings up some good points that make me feel a little better about the future.

I'll have to print out 1stdeadeye's comments and read through it carefully.

I bet you never thought you would type that eh?

On other news I went to dinner with some friends last night. I mentioned that I was debating the civil war and slavery on the web. Right away my buddy says that slavery was NOT the central issue of the civil war but economics and state versus federal power.

Well your buddy is obviously intellectually superior to you!

And your wives top you both!