I sat next to a woman at dinner the other night who, along with her husband, has been living in retirement for almost two decades. She said the problem with people my age is that we spend too much money. People her age who grew up in the shadow of The Great Depression know how to be frugal, she said.
I thought she probably had a point, until this morning when I read an interesting report from the National Center for Policy Analysis, a nonprofit that promotes free market alternatives to government regulation. It said living too high on the hog probably isn't the reason boomers are struggling with retirement planning.
Here are the real reasons boomers don't have retirement savings, the report says:
Rising cost of education. When I went to college, I paid my own way, but the tuition at Ohio State University where I graduated was less than $100 a quarter. Today, a college student can't get a job that pays enough to send himself to school, so Mom and Dad have to help. According to this report, the New York Federal Reserve Bank says one-third of the nation's student loan debt is held by individuals older than age 40. The report also says educational expenditures made by people 45 to 54 rose 80 percent from 1990 to 2010.
Helping grown children get by. Even after the kids are out of school, 59 percent of parents are helping their kids pay bills for necessities. Some 48 percent of parents are helping offspring with living expenses, 41 percent assist with transportation costs, 28 percent pay medical bills, and 16 percent are paying their adult children's loans.
Still carrying a mortgage. About 75 percent of middle-aged and older workers have mortgages, with 15 percent of them likely to carry that debt for the rest of their lives. Much of the debt is related to the decline in home values that puts mortgage loans underwater.
The report concluded that boomers are actually spending less on other kinds of purchases than they were 20 years ago.
- Food purchases, including spending at restaurants, has fallen 18 percent for those 45 to 54 and 20 percent for those 55 to 64.
- Household furnishings expenditures dropped 33 percent for those 45 to 54 and 25 percent for those 55 to 64.
- Clothing costs declined 42 percent for those 45 to 54 and 70 percent for those 55 to 64.
Looks like helping our adult children find jobs and get on their feet is the best retirement plan of all.