More Good news for Generation X

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Damnthematrix's picture
Damnthematrix
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More Good news for Generation X


More Good news for Generation X

[]
MSNBC.com

Boomers face stark choices in bleak economy
Prolonged economic collapse leaves little time to reinvent, recover,
rebuild
updated 5:29 p.m. ET, Wed., March. 11, 2009

It wasn’t supposed to happen this way.

The Me Generation’s twilight years were supposed to be a bookend for the
Golden Age of the American Dream they inherited after the country
triumphed in World War II. For all but a few, that dream is fast slipping
away, as a surge in layoffs and the collapse of the housing and financial
markets leave them with few options and little time to recover and
rebuild.

“I don’t think there’s any way around it: The baby boomers are going to
be in bad shape,” said Dean Baker, an economist at the Center for
Economic and Policy Research. “The only way that they're going to be able
to come out OK is if they can work later in their lives. Even then it’s
going to be tough because very often it’s going to be at considerably
lower wages.”

The statistics are bleak.

The housing market collapse has wiped out some $3 trillion in home equity
that once formed the bulk of most boomers' life savings. The incineration
of another $11 trillion in stock market wealth has cut a wide swath
through the individually managed accounts that have largely replaced the
employer-managed pensions that supported their parents’ generation in
retirement.

Some 3.8 million workers 45 or older were unemployed as of February ­ up
from 2 million when the recession began 15 months ago, according to the
Bureau of Labor Statistics. Many are now burning through what remains of
their savings and raiding retirement accounts to pay college tuition or
to meet basic household expenses.

As the economy and stock market continue to spiral downward, some boomers
who have fallen off the track they spent decades pursuing are angry and
searching for clues as to where they went wrong. Those who followed the
rules, climbed the ladder or just showed up at work every day for 30
years assumed they were assured of a solid middle-class life.

That’s what Bruce Hosking, 61, expected when he retired two years ago
after 40 years as a photojournalist, the last 20 at the Tampa Tribune.

“Retirement to me never meant kicking back and playing golf or any of
that nonsense,” he said. “Retirement meant doing what I want to do rather
than someone else telling me what to do. I was looking forward to
actually sitting back and enjoying the fruits of my labors. We were OK,
but we weren’t going to be taking world cruises. And we’re not OK now.
Like lots of people.”

Hosking says business is slowing at the commercial construction company
where his wife has worked for 18 years as an office manager. He’s been
producing videos to stay busy, but heavy losses in his retirement account
have forced him to look for another source of income.

“My nightmare would be (that) I’d be at the end of the checkout line
asking you, ‘Paper or plastic?’” he said. “This year is either going to
make or break us. If the economy doesn’t turn around, we’re going to be
with the rest of the people who face the possibility of starting to sell
off our valuables to stay alive.”

Hosking is part of a wave of retired or part-time working boomers who
thought they were free to enjoy deciding how to spend their remaining
years. With retirement accounts shredded, many once-retired boomers are
returning to the work force. Some may have to continue working as long as
they are physically and mentally able.

“We rarely saw job seekers who were 68, 70, 72, and now we’re seeing them
with some regularity,” said Bob Skladany, a career counselor and head of
research at RetirementJobs.com, a site that caters to older workers.
“They report that they cannot afford to live.”

Millions of younger, still-employed boomers, who thought their retirement
plans were on track, also may have to abandon the idea of ever retiring.

In past economic downturns, many 50-something workers faced a decision
about accepting “early retirement,” complete with a financial package
designed to tide them over to their next job or top off a retirement
account. With corporate profits tanking, many employers have simply
dispensed with the niceties of severance pay.

“They gave me no help. Nothing. Just ‘Have a nice day,” said Joanne, 51,
who asked that we use only her first name. “It was a horrible way to
treat people. It was unbelievable.”

Joanne said she suspected her job as a technology consultant was at risk
when she was asked to train someone else to do the work who was “half my
age, with half my qualifications. The clients will suffer, but that’s not
my problem.”

Barred by a non-compete agreement from contacting former clients and
unable to sell or rent her condo, Joanne has been looking for part-time
assignments to replace her $60,000-a-year salary.

“All I’m asking for is 10 hours to get me through next week so I can pay
my COBRA (health insurance),” she said. “That part is very is very
frustrating. I’m not asking for a whole job.”

It’s a stark turnabout for the generation born to postwar families in
tracts of newly built suburban cocoons, with new cars in the driveway and
“space age” appliances in the kitchen. Watching their country land a man
on the moon in the 1960s, it was a time of seemingly endless
possibilities.

Early in their careers, boomers survived the financial upheaval of the
1970s. Then came the great wealth creation of the 1980s and 1990s, the
Internet bubble and bust and the biggest housing boom in a century. Those
who stashed savings in IRAs and 401(k) accounts largely took the advice
of financial services professionals to buy and hold stocks for the long
term. Spurred by the real estate industry’s exaltation of the American
Dream of homeownership, they plowed money into buying, improving and
expanding their houses, confident that it was the best investment they
could make for their families and their future.

Now the collapse of the job, stock and housing markets is breaking this
generation’s grip on all rungs of the economic ladder. Since they entered
the working world, boomers have been conditioned to believe that
recessions last no more than 16 months; the return to prosperity is
always just around the corner. Economic reversals are temporary ­ a
furlough from the plant where you will eventually return to work, or a
brief hiatus “between jobs” until things pick up again. To be sure, many
of those who lost jobs in past downturns suffered emotionally and
financially. But for most, it was a temporary setback.

This time feels different. Many of those now coping with unemployment are
confronting the prospect that the career they spent 30 years building may
be ending prematurely. And the salary that fully valued their lifetime of
skills and experience may represent the high-water mark of their earning
power.

“It feels different because it is so widespread, and is affecting almost
every industry,” said Deborah Russell, director of workforce issues at
AARP, the advocacy group for the over-50 set. “For people like
blue-collar workers in the Midwest ­ these folks have not just lost their
jobs, even the function of what they did no longer exists. So even being
able to transfer those skills to, say, another employer in the auto
industry ­ it just doesn’t exist.”

White-collar boomers, including those with advanced degrees, top
credentials and decades of carefully groomed resumes, are confronting a
job market they’ve never seen before. Mark Cendella, founder and CEO of
TheLadders.com, a job service specializing in positions that pay $100,000
or more, says subscribers have become increasingly apprehensive as the
pace of layoffs continues to rise.

“In the last 12 months we're seeing the anxiety level and the stress that
comes through in e-mails have gone way, way, way up,” he said. “The
uncertainty has skyrocketed.”

Despite the global impact of the downward economic spiral, some boomers
report they have a tough time discussing their plight with co-workers,
family and friends. A neighbor’s financial setback often isn’t evident
until the foreclosure sign goes up on the front yard. That isolation can
only make matters worse, said Russell.

“There’s a personal pride in working,” she said. “And losing your job is
embarrassing ­ even it if it’s beyond your control and has nothing to do
with your performance. If people isolate themselves and don’t reach out
for help that can be a real issue.”

Though the recession officially began in over a year ago, the pace of job
losses began accelerating in October. As the number of job seekers has
risen, the number of openings continues to shrink – down some 50 percent
from when the recession began in December 2007. That means nearly five
people are competing for each opening, up sharply from a ratio of less
than 2-to-1 little more than a year ago.

That’s left some boomers stunned by the speed at which their jobs and
careers seem to be melting away.

It's also left them startled by the chilly response from employers to the
lifetime of skills and experience they’ve accumulated, a portfolio many
assumed would be their biggest asset in a job search. With employers'
profits shrinking, those years of experience turn out to be a liability
to hiring managers who associate older workers with higher cost. In
response, many boomers have begun paring back their resumes, dropping
mention of decades-old accomplishments and advanced degrees as they reach
further down the employment ladder.

Wes Masterson, 47, of Spokane, Wash., lost his job late last year as a
salesman for a Mississippi company that makes uniforms. He said business
began to slow last year, but his sales results were only down by single
digits when he got word that the company was eliminating his territory
and moving his accounts in-house.

“It just kind of hit me in the face,” he said. “In November, out of
nowhere, the V.P. of sales called me up and came out and told me they're
going to eliminate the Pacific Northwest position.”

Since then he’s been pounding the pavement and has surfaced a few leads.
But even though he’s willing to take less than his former $80,000 salary,
he’s finding employers balk when they find out how old he is. A car
rental company recently turned him down flat when he applied for an
entry-level opening.

“The day I filled out the application it was, ‘Sorry, you don’t fit into
our scheme,’” he said. “With all the experience I have, and willing to
work for less money, it just kind of blew me away. If you look on the job
boards, everything is two to five years experience. They feel the younger
kids are easier to train and aren’t going to cost them as much in health
care and benefits.”

As he widens his search, Masterson is considering going back to school
part-time for his MBA to increase his options and his appeal to potential
employers. It’s a shift that employment professionals say is picking up
speed as more boomers realize the need to “recareer” and embark on a
late-in-life second act.

Two-year community colleges and specialized trade and technical schools
report a surge in enrollments, in part due to an influx of laid-off,
older workers, forcing some schools to turn away applicants.

Trying out something new is something boomers are supposed to feel
comfortable with. This is, after all, the generation that came of age
amid the turbulence and exhilaration of a decade of wrenching social
change. The boomer generation's current search for “reinvention” is not
without success stories.

After a career as an administrative assistant for several large
corporations, Lynn Gorham, 51, decided to stay home and help her husband
with his home remodeling business and raise their two daughters, 16 and
13. Last year, when the family's business began to slow, Gorham decided
she needed to go back to work after a 13-year hiatus.

But after eight months of looking full time, she had landed just four
interviews.

“You can send out your resume all day, but it’s that interview that
counts,” she said. “I had to be careful with the word ‘experience.’ You
don’t want to make it sound like you’re older than you are. So the
interview skills are really critical.”

To better target her job search, Gorham spent time taking stock after a
potential employer had her take a personality test and skills assessment.

“I had to research to find out where I really needed to be,” she said.
“It focused on my customer service skills and my math ability. Are you
flexible, are you a morning person? That kind of thing. It made me stop
and think, 'I really do need to be looking at jobs like this one.'"

After interviewing in July with a local company that arranges housing for
students at local trade schools, she was one of three finalists but
didn’t make the cut. But in January, when the position opened up again,
she landed the job ­ just in time.

“We were just about down to our last dime; we were borrowing from my
kids’ savings accounts,” she said. “I think this is where I’ll be for
awhile. I think it’ll be a new career path.”

Still, the path to reinvention is not an easy one.

“Re-education is just not an option for many people,” said Skladany, at
RetirementJobs.com. “It costs money. It may preclude you from being able
to work. And frankly, not everyone wants to do the kind of occupation
that these certificates provide. A lot of older workers don’t want to go
back and become an auto body specialist.”

That’s left many boomers facing what Skladany calls “Plan B,” which
translates as “any job I can get.”

“But a lot of the plan B jobs have evaporated ­ like retail, financial,
clerical,” he said. “So these people are going into non-traditional jobs:
home personal care aids, customer service, telephone-based positions.
These are high turnover, undesirable jobs that a lot of older workers are
going after.”

“Plan B” used to involve tapping a financial cushion that was too thin
for many boomers even before the economy collapsed. But the swift
destruction of trillions in wealth has exposed the massive shift of risk
from employer to employee that came with the decades-long phase-out of
traditional company-managed, defined-benefit retirement plans to
individually managed, defined-contribution plans.

“It’s a real rude awakening,” said Baker, co-author of a report on the
impact of the housing bubble's collapse on the wealth of baby boomers.
“An awful lot of people just didn’t think this was possible. Everyone
appreciated that there’s more risk with defined-contribution accounts.
But this is bringing it home with a sledgehammer.”

Many boomers are now taking a hard, second look at the relentless advice
of the financial services industry to stash savings in IRAs and 401(k)s
and buy and hold stocks for the long-term. As financial planners and
stock brokers confidently pointed to the stock market’s decades-long
track record of solid gains, others warned that boomers face risks that
their parents’ generation avoided through reliance on a professionally
managed, employer-guaranteed pension.

The lesson may be that that planning, accumulating and managing a
retirement fund is a full-time job best left to professionals. Most
people just don’t have the skills or temperament to pull it off,
according to Alicia Munnell, director of the Center for Retirement
Research at Boston College.

“Evidence indicates that people make mistakes every step of the way,” she
recently told a congressional panel. “They don’t join the plan, they
don’t contribute enough, they don’t diversify their holdings, they
overinvest in company stock, they take out money when they switch jobs
and they don’t annuitize at retirement.”

As even the most seasoned, professional money managers lick their wounds
from a historic market collapse, boomers approaching retirement are
facing the biggest risk of all: that the market collapse will leave them
without enough time to recover and rebuild their savings before they lose
their job or their health.

For many boomers, homeownership was supposed to be the final fallback, a
financial backstop that would help make up for any shortfall in
retirement savings. As the housing boom picked up speed, buyers and
sellers were assured by the real estate industry ­ from homebuilders to
real estate agents ­ that house prices had never fallen, year-over-year,
since the Great Depression.

Now, with housing prices down nearly 20 percent nationally and still
falling sharply in many areas, that fallback plan has failed millions of
boomers. Though some clearly reached too far, the housing collapse has
destroyed the savings of millions more who were prudent borrowers.

“I know people who went for those interest-only loans. I know better. I
have an MBA in finance,” said Joanne. “I actually went way under my head
on buying something. It’s very, very upsetting. ... I’ve lost almost my
life savings. And how was I supposed to know that? That part is probably
the hardest.”

With few signs of an upturn, policymakers in Washington are pinning their
hopes on the economic stimulus package and the ongoing effort to shore up
the battered financial system. But those offer little comfort in the
short run.

“I’m very pessimistic about it,” said Masterson, the former salesman. “I
think the stimulus plans that they’ve come out with are full of pork. I
don’t think they're the right thing to do. The tax cuts don’t help me
because I don’t have a job.”

But with few alternatives, and time running out, boomers are left with
little choice but to soldier on in their job searches.

“Just keep looking,” said Gorham. “It’s a numbers game. After so long,
it’ll happen.”

URL:

http://www.msnbc.msn.com/id/29535417/

SamLinder's picture
SamLinder
Status: Diamond Member (Offline)
Joined: Jul 10 2008
Posts: 1499
Re: More Good news for Generation X

Geez, Mike. I feel like you've posted my life story!  Frown

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: More Good news for Generation X

Really...?  Sorry to hear that Sam, I was under the impression you were one of the better prepared..?

Mike

SamLinder's picture
SamLinder
Status: Diamond Member (Offline)
Joined: Jul 10 2008
Posts: 1499
Re: More Good news for Generation X

Many boomers are now taking a hard, second look at the relentless advice
of the financial services industry to stash savings in IRAs and 401(k)s
and buy and hold stocks for the long-term. As financial planners and
stock brokers confidently pointed to the stock market’s decades-long
track record of solid gains, others warned that boomers face risks that
their parents’ generation avoided through reliance on a professionally
managed, employer-guaranteed pension.

For many boomers, homeownership was supposed to be the final fallback, a
financial backstop that would help make up for any shortfall in
retirement savings. As the housing boom picked up speed, buyers and
sellers were assured by the real estate industry ­ from homebuilders to
real estate agents ­ that house prices had never fallen, year-over-year,
since the Great Depression.

Now, with housing prices down nearly 20 percent nationally and still
falling sharply in many areas, that fallback plan has failed millions of
boomers. Though some clearly reached too far, the housing collapse has
destroyed the savings of millions more who were prudent borrowers.

Mike,

Perhaps I was a little too dramatic with my initial response. Actually, the paragraphs quoted above are the ones that hit closest to home. We followed the so-called good advice of the financial wizards for years and years only to discover that it was all a house of cards. We also own a home that has probably dropped 1/3, or more, of its value in the last one to two years. Fortunately, we have only a small mortgage remaining so we are not underwater.

However, we also fear for my wife's California pension and our social security pensions. If those disappear, we're in deep you-know-what. We saved based on the 3-legged stool concept (Pension, Social Security, Savings: again, following the financial advice hammered at us for years). Now, it appears that there's a danger we may have nothing left but our savings. Then, if the dollar collapses and our savings become worthless, you'll see us on the evening news setting up a new tent city just outside Portland, Oregon!  Sigh........................

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