By Harriet Murray ● Cochran Real Estate ● January, 2013
US credit writer Roman Shteynhas discovered some little-known facts about our baby boomer generation.
Baby boomers are the first generation in American history to be entering retirement saddled with debt, including unpaid balances on credit cards. “Experts” who predicted the lifestyle patterns and retirement for baby boomers, were not aware of the debit they have accumulated.
The financial crisis of 2008 sent the economy into a recession which crippled many baby boomers’ retirement accounts. Many were forced to stay in the workforce or significantly alter retirement lifestyle plans. The oldest of the boomer generation is now receiving social security checks and credit card bills in the same mail delivery.
For those 65+, the average credit card debt is $9,283 or 4 times the average credit of younger card holders. The amount of debit for baby boomers may continue to rise as they age. They have fallen into the trap of financing their lives on credit cards.
The brutal financial reality for baby boomers is that they have entered their “golden years’’ during a period when it has become increasingly difficult to build, protect, and grow wealth. Traditionally the highest level of compensation comes from working in your 50s and 60s. These decades used to be a time to increase 401(k) balances and settle into a financially-secure retirement.
If baby boomers were fortunate enough to be employed in a business surviving the current recession, they often found they were earning less than they had in comparable jobs before the downturn. If they were unable to find work after being laid off, they may have opted to take Social Security early, which has reduced their lifetime payment.
The financial crisis which brought down the stock market and housing economy was a major blow to baby boomer’s retirement savings. The equity in their homes was reduced or lost. For most of this generation, their homes were their single largest source of wealth.
To add to their financial strain, it has been discovered by the US National Center for Public Policy that almost 60% of baby boomers provide financial support to adult children.
A more disturbing fact is that many boomers have accepted carrying their debt into retirement. A 2012 poll by CIBC bank has found that 80% of this generation is not anxious about carrying debt or the amount of it. In addition, CIBC has found less concern among the respondents about getting their finances in order to pass on an inheritance to the next generation.
Recent reports have focused heavily on the growing amount of student loan and credit card debt by students who are graduating college. It remains to be seen if they have learned from their elders to work to remove their debt before entering retirement.
This article is based upon legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review.