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.”Video: From exec to janitor, boomer holds head high
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.”