The concept of retiring before one becomes unable to work or dies is a new and untested one. For as long as human history, it has always been the case that one retires when he/she dies or when he/she is unable to work anymore. Only recently, in the last 50 years or so, people aspired to early retirement. I think this is an anomaly in history, a one-off period of prosperity and favorable demographics.
The generation prior to boomers can retire early because boomers provide the labor they need. There are a lot more boomers than their predecessor generation. Boomers will either not be able to retire early, or retire with lower living standards, because the following generation (Gen-X) is much smaller to provide labor for them.
Think about demographics. Money, income, investment return, are of little relevance. Retirement is equal to consuming things without producing them, or consumption without labor . For one group of population to retire, other groups must provide excess labor and production to support it. One generation can afford that only if the next generation provide all the labor and excess production to support it. This is impossible for baby boomers, as Gen-X generation will not be able to have excess production and labor as much as boomers provide excess production and labor to the predecessor generation.
The generation prior to boomers can retire early because boomers provide the labor they need. There are a lot more boomers than their predecessor generation. Boomers will either not be able to retire early, or retire with lower living standards, because the following generation (Gen-X) is much smaller to provide labor for them.
Think about demographics. Money, income, investment return, are of little relevance. Retirement is equal to consuming things without producing them, or consumption without labor . For one group of population to retire, other groups must provide excess labor and production to support it. One generation can afford that only if the next generation provide all the labor and excess production to support it. This is impossible for baby boomers, as Gen-X generation will not be able to have excess production and labor as much as boomers provide excess production and labor to the predecessor generation.
Advise for boomers. Don't think that you will be able to retire both early and comfortably (see my previous post on demographics). Having both is impossible, having one may be possible. Keep your skills sharp so you can still work into late age. Consume less so you do not put a heavy burden on the younger generations to provide excess labor and production.
Looking at demographics, in the next 10-15 years, Gen-Xers are going to be the sandwich generation. They must produce excess labor and production to support boomers who have retired, and at the same time support the millenials as they have not fully entered the labor force. This can only mean one thing. Gen-Xers will have jobs, in fact each of them will have 1.2 jobs vacanted by boomers. However, since their excess labor and production will be needed for boomer retirees and not-yet-productive millenials, their income will be heavily taxed. Inflation will be the rule of the day too. Only after millenials enter the labor force in droves, Gen-Xers' life will be better. Advise for Gen-Xers: prepare accordingly. You will need that good health to work 1.2 jobs. You will need ingenuity to invent new ways to increase your work productivity. You need to be nice to the millenials and train them well so they can join you to supply the excess labor and production to support boomer retirees. |
