Pre-Boomer Musings

Now that people have had a chance to read the historic health care bill, the problems, oversights and blunders of this legislation are starting to surface.  And some of these will affect New Seniors.  At the same time, there are other factors that cause those of us on fixed incomes to wonder if the light at the end of the tunnel is actually a freight train heading for us at great-neck speed.

The write-downs, caused by passage of the health care bill, that some of the major companies are reporting could lead to elimination of company sponsored prescription drug plans or result in substantial losses to these firms.  This problem surfaced because the government plans to stop subsidizing such efforts, and activities that might have substantial impact on a businesses bottom line required the corporations to report this information to the Securities and Exchange Commission (SEC).  AT&T, Caterpillar and Prudential are among the early reporters of potential problems.

More such revelations can be expected as the details are examined and implementation of this large and unwieldy plan begins.  Concerns over what health care benefits will be lost once the proposed Medicare cuts become reality and the quality of care are just two issues that worry New Seniors.  Higher taxes, to help pay for more people receiving insurance, are expected to surface in many forms in the months and years ahead.  And retirees will not be exempt.

To add to the New Seniors worries, on top of the reduced value of our homes and the stock market still well-below the high mark it hit just a couple of years ago, we are faced with extremely low interest rates on whatever saving we may still have in the bank.  In 2006 a one-year Certificate of Deposit (CD) earned interest of almost 5.5%.  Today, that same instrument would yield is about 1.30%.  This provides the retiree with over 75% less money from savings on which to live.

At the same time inflation is increasing, so more and more New Seniors are forced to take out the principal in order to meet expenses.  So were the years of hard work, sacrifices and careful financial planning for naught?  If we are healthy enough to live a long life, will we run out of money and need our families or the government to provide assistance?  Even though we did all the right things to avoid being put in this kind of situation?  This is not what we were taught to do, nor is it what we want to do.

Tell your Congressman or women that the banks have been getting money from the Federal Reserve at low rates and their financial statements are looking good.  So it’s time to take a look making safe investments, like CDs, more attractive.  Otherwise, the government is going to have a real problem on its hands when the 76 million Baby Boomers start turning 65.  This rush of people becoming New Seniors will be taking place every year through 2030.  And, while the government gives lip service to this phenomenon, history suggests that few of those in Washington are prepared for the impending impact the aging of America will have on everyone.

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