Boomers face stark choices in bleak economy

John W. Schoen Senior producer • Profile • E-mail

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.”

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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.”

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