What life and the election tell us about our future
The cohort of about 75 million Americans born
between 1946 and 1964 fascinates demographers, futurists, social
scientists, marketers and others. What the baby boomers have thought
about or done has dominated national conversations and redefined social
policies, politics, culture and economics.
We know that America's gray-wave tsunami could swamp
retirement, health and welfare systems, transforming politics, the tax
code, labor law and banking and investment markets. Boomers will force
revision of age discrimination rules in the job market and raise
end-of-life issues to a higher level of debate. Boomer value-nomics,
their values as expressed in economic behavior, represents the
transforming issue of our time.
Yet for all that has been said, the most telling
observation about boomer-driven trends appears in a report from the
2005 White House Conference on Aging Policy: "While many experts,
popular pundits and the press have made predictions about how the aging
of the baby boomers will affect the United States, in actuality, no one
really knows with any certainty what will happen."
Here is what we do know. In 1996, the first of the
boomers turned age 50. Something happens on your 50th birthday. When
you get an AARP card in the mail, your first reaction is,
"Oh-mah-gawd!" When you were younger, you knew people in their fifties.
They were old. You are not old. You are not middle age, even if you are
halfway to 100. You look good, you mumble, as you head for the gym,
tucking your new AARP card into your wallet "because you can use the
discounts." You're on your way, baby!
The fifth decade of life is an interesting one.
Given the trend toward later marriage and delayed childbirth, couples
and single parents may be facing heavy educational expenses for
children. Aging parents may need help. Retirement as a goal, often yet
to be defined, is a phantasm on a fuzzy horizon, and "the needs of
'now'" conflict with idealistic visions and savings goals.
"Stuff" happens in the fifties,
to paraphrase a bumper sticker. Marriages break up, even as others
celebrate 20- and 30-year anniversaries. Both events engender
reflection. Milestones in our children's lives are cause for
celebration and, at times, concern. Parents die. Spouses die. Friends
die. End-of-life lessons are made real. Illnesses strike us and others.
On the positive side, we recognize that we are
blessed. By age 60 we mature, and know that we are blessed. We finally
know what we are to be "when we grow up." We begin to think more about
significance, recognizing that "significance" and "success" are not the
same things.
Where do we go with this? Many of the leaders who
are thought-molders in our profession, and the pundits who write about
us, are in their fifties. They grew up in an Age of Innocence from 1946
to 1964, nurtured by the World War II and Korean War generations, who
determined to give their offspring what they were denied, especially
educations. Our leaders and practitioners reflect that brain trust,
with a plethora of undergraduate and graduate degrees and professional
designations.
Well-educated and less reserved than their parents,
boomer advisors passed through the "drug, sex, and rock 'n roll" crazes
of the Age of Rebellion from 1964 to 1979. We wanted to "make love, not
war," but some of us went to war in Vietnam, shocked to learn that the
world was not one big Happy Hour. We came back more sober, and in many
ways more mature than we might otherwise have been.
Perhaps we learned, too, in the
Age of Indulgence from 1974 to 1987, that there was more to life than a
BMW, a big house and toys. Maybe he who dies with the most toys
actually loses. We shocked ourselves by becoming responsible parents.
As we preached self-reliance to our kids, we had to walk the walk, or
become what we abhorred-a phony.
We began to come of age starting in 1987 and, for
certain, everything changed on 9/11/2001. The children of the '50s knew
that the world was a dangerous place when "duck and cover" drills in
grade school reminded us that evil Russian bombers and missiles could
turn us into crispy critters. Now it is terrorists with box cutters,
B-767s as cruise missiles, suicide bombers and WMDs that jolt us into
reality.
If the Age of Maturity did not
begin in 2001, it will when the first boomers of 1946 turn 60 in 2006.
Ben Coombs, a CFP licensee and past president of the Institute for
Certified Financial Planners, set up a mentoring group for young
planners. Tagged The Rat Pack, led by Ben and volunteer planners over
age 50 with years of experience, i.e., the old rats in the barn,
members commit to helping, sharing and mentoring financial planners new
to the profession. The Old Rats In The Barn primarily are in their
fifties and sixties, and are indicative of a trend.
Ben sold his interest in his financial planning
practice near Los Angeles and moved 200 miles north to a small town
near Yosemite National Park. He stays active and still has clients.
Call Ben's old office and, "click," he is on the phone from exurbia.
With satellite, fiber optic and Internet technology, we can be "out of
touch" yet "in touch." Ben calls his situation "restylement," not
"retirement." He is redefining retirement as the boomers will do, and
we as advisors will do and are doing.
By mentoring younger planners, Ben is giving back.
The 1998 AARP/Roper Baby Boomer Study defined the Boomer population as
represented by five segments. The "Strugglers" comprise 9% of the
boomer universe, people with low incomes, no savings and little
optimism. One rung up on the ladder are the Anxious (23%), people with
some savings but limited means, with anxieties about retirement
finances and health care. A large percentage of these two groups will
be women, widows and divorcees. These groups exceed 24 million persons.
Where will they go for help?
Such clients do not have the wherewithal to meet
"assets under management" minimums or pay significant planning fees. We
may see "restyled" part-time veteran planners stepping in to offer
advice by the hour as needed, business models for which are well
established, e.g., the Garrett Financial Network.
"Giving back," by sharing wisdom and time-tested
practical savvy, will be a growing component of value-driven boomer
activism. Pro bono counseling and workshops, and service through
community and faith-based institutions, will increase.
The New Retire-mentality
Ben Coombs calls it "restylement." Mitch Anthony in
his 2001 book tagged it as "The New Retire-mentality." The AARP study
noted three other categories of Boomers-those well off compared to the
Strugglers and the Anxious. The Enthusiasts (13%) plan to not work at
all in retirement, can't wait to get there and are optimistic.
The "Self-Reliants" cohort (30%) is descriptive of
many boomer planners-putting money into a diversified portfolio of
investments, optimistic, regarding Social Security as an "extra."
Almost 99% of this segment expects to work part-time, for enjoyment but
primarily to sustain an active mind. The attitudes of the Self-Reliants
drive most planners and will impact the advice given to clients. We
will pass on our enthusiasm for an active retirement and help clients
to design portfolios based on that premise.
Today's Traditionalists (25%) are confident, plan to
rely on Social Security and Medicare (they will be strong advocates of
government safety nets, more so than the Self-Reliants), and plan to
work just to keep busy and supplement income.
A total of 68% of boomers comprise the top tiers,
almost 52 million "senior citizens to be," a massive retirement
rollover market and financial advisory target. The age 60-plus group
controls roughly 70% of the IRA assets in the U.S., based on 1999 data
compiled by the Employee Benefits Research Institute.
It is worthwhile to note that pre-boomers, those
born before 1946, are a huge target for financial services. This cohort
includes pre-retirees (persons born in 1940 turn 65 in 2005),
semi-retirees and retirees. Healthy seniors, age 60 to 75, are major
consumers of travel and "experiential" services; they love and want to
enjoy children and grandchildren. They are concerned with estate
planning, maintaining financial integrity and common sense distribution
and income strategies. The WOOF (well-off older folks) market is
BIG-the current market and the boomer-driven market to come. Boomers
may not believe it, but they will think very much like the pre-boomers
of today. Look at today's "young" seniors as a clue to the future.
Considering trends and possibilities, one must
question early demographic doomsday scenarios that envisioned stock
markets falling off of a cliff when boomers start to suck money out
after 2011. Many will reach full retirement age, start drawing Social
Security while continuing to pay into the system, as well as Medicare,
and while continuing to work and maintaining coverage under employer
health plans.
They will continue to build and sustain investment
portfolios. There will be pressure to eliminate required minimum
distribution (RMD) requirements, and an expansion of Roth IRA coverage
will do that in any case. With IRA "stretch-out" provisions, WOOFS may
regard retirement accounts as more of a wealth-transfer device to
children or grandchildren, and less of a source of major retirement
income.
Many clients age 65 and up are following that track
now, even grumbling about forced distributions at age 70 1/2. Such
trends will ease pressure on Social Security and Medicare systems.
Lifespan is increasing and boomers are quick to
demand and embrace the latest in technologies and medicines. Boomers
are healthier than past generations. Look at the sales of bottled
water, Atkin's products and diet books, while stock in Krispy Kreme
plummets in value as health-conscious boomers and pre-boomers disdain
circular fried fat-bombs.
Boomer advisors have spent a fortune on coaching
programs to bring balance and meaning to life. They are passing those
attitudes on to clients, other boomers and their own children. The
pursuit of meaning will not end in retirement.
The Values Boom
The biggest change to hit boomers in their
mid-to-late fifties is the realization that "it is not just about me
anymore." As we age, we attend an increasing number of funerals for
successful friends, associates, parents, grandparents, loved ones. We
know that God does not ask for a net worth statement. He will not ask
about our zip code, car, home, club membership or awards.
All great religions rest on two pillars, overarching
great commandments involving worship and service. That's what God will
ask of us as we stand before the Eternal Revenue Service-an accounting
as to how we applied and shared our gifts and resources. We see such
concerns in the growing interest in financial life planning-seeing
meaning beyond money, and the spiritual over the materialistic.
Many of those leading the conversations about what
has been called "financial life planning," "interior finance," etc.,
are boomers-George Kinder, Dick Wagner, Mitch Anthony, Carol Anderson,
members of the Nazrudian Project and others. Roy Diliberto calls the
process "financial planning done deeper and better," i.e., holistic
planning. These are thinkers who by and large are moving into the Age
of Maturity, pondering their own place in the big picture, developing
dialogues and increasing a body of knowledge that has already moved
data gathering from an X-ray to an MRI, and financial advice from a
conversation about numbers to an examination of value-driven
possibilities. Financial life planning is itself a product of the
boomer age wave.
The Coming of Age and Maturity revolutions are
permeating political discourse. During the Age of Rebellion and Age of
Indulgence the philosophy was, "OK, man, like whatever!"
Doing-your-own-thing was de rigueur' and libertarianism ruled. In the
"Me Decade" of the 1980s, we were uncomfortable about passing judgment.
We were not evangelists, and were reluctant to call others to action.
But as waves of boomers mature, serious about family values and the
quality of life, attitudes change.
The election of 2004 may have represented a
boomer-driven "tipping point." The Nov. 22, 2004 issue of the
liberal-leaning New Republic magazine ("Quadrennial (sigh) Recrimations
Issue"), offered pythonic observations that may be linked to the
Boomer Maturity Wave.
Writer Andrei Cherney noted that exit polls in swing
states indicated that moral and value issues had a major influence on
voter choices. While the reference to values "served as an overly broad
catchall, the fact that voters who selected it as their most important
issue went overwhelmingly for Bush (80% to 18%), indicates that it was
a phrase with some meaning."
No one suggested that the 57 million citizens who
voted for John Kerry did not have values, but Democrats seemed
surprised by "the fact that, in supporting Bush, so many middle-class
voters failed to vote in their economic self-interest" (jobs,
healthcare, no "privatization" of Social Security, etc).
But Cherney states that "Americans do not enter the
voting booth in the manner of accountants calculating take-home income.
They have historically voted on hopes and resentments that have nothing
to do with the bottom line." Cherney warns: "The values
inculcated by family and community-such as hard work, personal
responsibility, patriotism, faith and integrity - are not only
religious in origin. Yet they are part of the nation's civic creed, and
Republicans can no longer be allowed to have a near-monopoly in running
on them."
It's The Story, Stupid!
Born on July 6, 1946, George W. Bush, the 43rd
president of the U.S. followed the trail of a typical
boomer-well-educated, restless, drinking too much. Bush himself admits
to "nomadic periods" of youthful irresponsibility. In his late
twenties, he was arrested for DUI in Maine on Labor Day Weekend in
1974.
Bush married Laura Welch in 1977, and twin daughters
were born in 1981. In 1986, at age 40, George Bush became a born again
Christian, joined Laura's United Methodist denomination and swore off
drinking. Campaign 2004 presented a photogenic family, a loyal and
articulate wife of 27 years, a reformed rascal who was true to his
word. Well, that's a story. Elitists can laugh, but Main Street America
loves "born again" stories.
A senior Kerry advisor, quoted in the same New
Republic issue, complained, "People had a story about George Bush. The
story was he was the accidental president who was transformed by 9/11
into a strong, serious leader. That kind of story matters to people."
The boomer clients of tomorrow will not want a
laundry list of products, or a litany of technical issues. They will
want a financial plan that recognizes and values their story, couched
in the story they have yet to write. The self-reliant boomer advisor is
well positioned to embrace the story proposition in a world of
increasing complexity and promise.
Although he spent much of the first 40 years of his
life as a classic underachiever, Bush suddenly finds himself in a
position where he could become a great or near-great president. He is
far more willing to take big risks than his two most recent
predecessors, his father or Bill Clinton. He has learned that if you
set your sights high and try to do great things, you just achieve them.
His current attempt to reform Social Security looks to be in trouble
but shrewd observers have learned not to "misunderestimate" him.
From the White House to your house, boomer thinking
will impact everything. The stated mission of the 2005 White House
Conference on Aging Policy is to harness "our national goodness and
vibrancy to initiate a constructive process of intergenerational policy
dialogue, development and implementation." The Boomer cohort is now
running the show. It will be quite a story!
There are dangers, however. If we extend the
retirement age, will we get one more final tour by The Rolling
Stones? Yeah, baby!
Lewis J. Walker, M.B.A., CFP, CIMC,
CRC, is president of Walker Capital Management Corporation and Walker
Capital Advisory Services Inc., in Atlanta, and has served as national
president of the Institute for Certified Investment Management
Consultants.