Wednesday, March 20, 2013

Avoiding The Fallout Of The Baby Boom

(This is not an attack on baby boomers as both my parents were born in that time period and I love them very much. This article is a collection of my thoughts on the effects that this generation will have on future generations and how to reduce the impact on myself and others.)

Baby boom

At the end of the second world war, there was a time of peace and prosperity throughout the planet…and an awful lot of baby making going on. The economies soared from war production with plenty of job opportunities so it made perfect sense to have lots of kids. This increase in the world’s population started off as a ripple in time, but that ripple is building inertia and the waves of “generation Me” are taking their toll on the future generations.

Retirement?

As the front runners of the baby boom started approaching their golden years and began planning their retirement the unthinkable happened; the world economy fell into the toilet. Many baby boomers lost their shirts with the financial meltdown of 2008 and 2009, forcing them to re-consider their retirement plan. Some boomers who chose to retire are now “double dipping” as they collect a pension AND a paycheck trying to re-build their life savings. Others without pensions are forced to work beyond 65 as they took on too much debt and are forced to pay it off before they can even think about retirement.

Diminishing Workforce

This prolonging of retirement is having a huge impact on the future generations headed into the workplace. Not only are more jobs still filled with aging boomers, but more and more jobs are being eliminated all together thanks to automation and innovation. The shortage of jobs is causing more and more competition among young workers which gives more leverage to employers. “Why fill Ted’s 100k position when someone else is willing to do that job and more for 50k”. They predict that by the year 2050, over half of the current jobs in the world will be gone. If that’s true, I sure hope I leave a large inheritance for my kids!

Life Expectancy

In the early 20th century, the average life expectancy was 47. Now the average life expectancy is 90. It takes more retirement savings to support a longer retirement which is catching current retirees of guard, causing them to experience a lowered quality of life. As people live longer, it will be putting a strain not only on private and government pension funds, but the healthcare system as well.

The Scary Part

As more and more baby boomers retire, there will be a shift in the workplace with fewer people working in even fewer positions. In the past there were four baby boomers working for every retiree. Now there will be one worker for every four retired boomers. With less people in the workforce and more people relying on CPP, there is going to be a shortfall in the near future.

We’ve already seen the Canadian government raise the age limit of collecting CPP and AOS to 67 in order to help relieve the strain, but that’s just a bandage fix for a growing problem. I believe the age limit will be increasing again in the near future and there will be a spike in CPP premiums and income tax as well to cover the cost of retirees living longer. Someone has to pick up the costs, and it isn’t going to be the politicians.

I do however think there are ways to avoid some of the negative impacts from the baby boomer generation, so make sure you join me for part two of my discussion.
Are you already feeling the negative effects from the baby boom generation? Can you foresee the same problems I see down the road?

This article was written by The Loonie Bin. If you enjoyed this article, please consider subscribing to his feed.

1 comment:

  1. Loonie Bin
    I think you may have overstated the life expectancy numbers. Perhaps you are basing it on some one born today. Those born during the baby boom would have a lower life expectancy than someone born today.

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