They are asking questions about you. they are wondering if Boomers will do what they should or if they have been stung so hard by the recession, that they will never be the same.
Will we be asking the same question sixty months after the beginning of this recession as was asked at the thirty month mark? The Pew Research Center's Social & Demographic Trends project might, as they did recently (click here for the report, downloaded as a pdf.) The question is, will it harbor the same hopes and fears as the current report, one where despite the cut in pay, the unemployment experienced by many, the switch to part-time and cut in hours available to work indicate that six in ten surveyed thought that things will be or are getting better? Perhaps.
The reports, as thorough as they may be, are backward looking. It makes one wonder if we are looking at the same point in time (the old philosophical question of being unable to step in the same river twice) and be able to use that point in time to predict the future. I'm thinking the answer is yes and no.
Yes, because the people they are surveying cut across a wide demographic and tells us that the lower your income, the less likely you are to spend more than you absolutely have to. This group, as well all know to well, drives the consumer numbers.
And no, because the folks closest to retirement age may have benefited in the bull market from 1982 to 2000 and although they have seen diminished balances in their retirement nest egg (about 24%), they still know what it will take to retire.
This knowledge is perhaps the worst enemy for this group even as it has become the new focus for advisers. The 54+ group are more likely to say, according to the report that they are in worse financial shape. But how much worse?
The report does suggest that this group will delay retirement but doesn't say why. It doesn't suggest that they couldn't lower their expectations (there are more that now think of themselves in a lower economic class) and still retire. The assumption is based on how they feel about their home values (although important in wealth calculations, it is still the most illiquid of measures but it is a debt that does put pressure on total assets) and the pressure the economy has put on their children (9% of the respondents moved home and 49% reported loaning money to possibly avoid the possibility that their kids move home).
Lower confidence numbers don't derail the sentiment that America is still the land of opportunity and things will get better. Yet the folks who suggest they will have to work longer are actually at the root of the problem with unemployment. New jobs can be created through attrition and if workers stay on and do so foregoing pay raises, toughing out lower worked hours and because they believe they have no other choice, the length of this recession will extend itself out longer than predicted.
Financial advisers, who now fancy themselves as financial managers wonder whether this group is interested in the products they sell that might help? If, as the report indicates, they are looking at cheaper brands to buy, then as long as it costs them less to invest, they will. But I don't think we can assume they will believe that lower cost (i.e lesser risk) financial products will deliver the same bang for the buck. They have to know that they are getting something worthwhile for less than they paid for it previously. If household wealth is down 24%, then perhaps that would be a baseline for product pricing cuts.
But they may be showing less trust in lower prices that rapidly increase with each new layer of protection.
I distinctly remember the relief experienced in the mutual fund industry when the 2001 downturn was no longer accounted for in their five year track records. If that is any indication of when consumers can be convinced that things are better, then we only have four more years to wait. (Which ironically, is about how long those surveyed believe housing prices will recover.)
So many advisers are wondering where the break line between intent and action occurs. Or worse, how to create action where there is no intent.
Will we be asking the same question sixty months after the beginning of this recession as was asked at the thirty month mark? The Pew Research Center's Social & Demographic Trends project might, as they did recently (click here for the report, downloaded as a pdf.) The question is, will it harbor the same hopes and fears as the current report, one where despite the cut in pay, the unemployment experienced by many, the switch to part-time and cut in hours available to work indicate that six in ten surveyed thought that things will be or are getting better? Perhaps.
The reports, as thorough as they may be, are backward looking. It makes one wonder if we are looking at the same point in time (the old philosophical question of being unable to step in the same river twice) and be able to use that point in time to predict the future. I'm thinking the answer is yes and no.
Yes, because the people they are surveying cut across a wide demographic and tells us that the lower your income, the less likely you are to spend more than you absolutely have to. This group, as well all know to well, drives the consumer numbers.
And no, because the folks closest to retirement age may have benefited in the bull market from 1982 to 2000 and although they have seen diminished balances in their retirement nest egg (about 24%), they still know what it will take to retire.
This knowledge is perhaps the worst enemy for this group even as it has become the new focus for advisers. The 54+ group are more likely to say, according to the report that they are in worse financial shape. But how much worse?
The report does suggest that this group will delay retirement but doesn't say why. It doesn't suggest that they couldn't lower their expectations (there are more that now think of themselves in a lower economic class) and still retire. The assumption is based on how they feel about their home values (although important in wealth calculations, it is still the most illiquid of measures but it is a debt that does put pressure on total assets) and the pressure the economy has put on their children (9% of the respondents moved home and 49% reported loaning money to possibly avoid the possibility that their kids move home).
Lower confidence numbers don't derail the sentiment that America is still the land of opportunity and things will get better. Yet the folks who suggest they will have to work longer are actually at the root of the problem with unemployment. New jobs can be created through attrition and if workers stay on and do so foregoing pay raises, toughing out lower worked hours and because they believe they have no other choice, the length of this recession will extend itself out longer than predicted.
Financial advisers, who now fancy themselves as financial managers wonder whether this group is interested in the products they sell that might help? If, as the report indicates, they are looking at cheaper brands to buy, then as long as it costs them less to invest, they will. But I don't think we can assume they will believe that lower cost (i.e lesser risk) financial products will deliver the same bang for the buck. They have to know that they are getting something worthwhile for less than they paid for it previously. If household wealth is down 24%, then perhaps that would be a baseline for product pricing cuts.
But they may be showing less trust in lower prices that rapidly increase with each new layer of protection.
I distinctly remember the relief experienced in the mutual fund industry when the 2001 downturn was no longer accounted for in their five year track records. If that is any indication of when consumers can be convinced that things are better, then we only have four more years to wait. (Which ironically, is about how long those surveyed believe housing prices will recover.)
So many advisers are wondering where the break line between intent and action occurs. Or worse, how to create action where there is no intent.
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