Boomer Blindness

Monday, November 21, 2011
By Paul Martin

by Gary North
LewRockwell.com

“MarketWatch” ran an article on the attitudes of retired Americans ages 55 to 75. The title is accurate: “Retirees are confident, but workers can’t retire.” But the subtitle points to the problem facing these people: “Retirees’ finances recover, but one-in-four workers plan to work until 80.”

The article reports on two surveys. The first is a survey of over 1,500 retirees in 2008 and 2011. These people had $100,000 or more of investable assets in 2008. Age range: 55 to 75. Think about this. Some of these people had retired at age 55. This is surely not a normal segment of the population. Second, they had at least $100,000 to invest. Is this sample representative of retired Americans?

Figures from 2007 – the year before the recession hit in full force – indicate that the median net worth of households whose heads were 65 to 74 years old was $239,400. The word “median” refers to an average where half the sample population is above and half below. It gives a much better indication of the condition of the average Joe than the mean average, where the figure is the total wealth divided by the number of families in the sample.

This median net worth statistic included the equity in homes. To estimate investable capital, we must subtract the equity value of the homes from the total net worth figure. According to this chart on Wikipedia, the median sales price of a home in 2007 was $250,000.

Combining the two figures, at least for those home owners who had paid off their mortgages in 2007, the net investable capital of families headed by people 65 to 74 in 2007 was negative $11,000. This is an optimistic estimate. Not all people in this age group owned debt-free homes.

So, the survey of 1,500+ Americans with investable capital of $100,000 or more is so utterly unrepresentative of retired Americans that it should be considered a survey of attitudes of rich retirees.

The MarketWatch article did not mention any of this. It simply reported on the survey’s findings. It began:

The financial crisis of 2008-09 hit retirees hard, but a majority of them now express confidence about their finances and have adopted more prudent spending habits, according to a survey that followed the same group of higher-income retirees from 2008 through 2011.

The Rest…HERE

Leave a Reply