Wednesday, July 11, 2012

Baby Boomers - Rags To Riches To Rags

The baby boomer generation is finding challenges that they never thought they would and are going from rags to riches to rags again.

Retirement account over half full last quarter - Great! Retirement account lost 50% of its value this quarter - Great now what do we do!

Whew! How did I get there... let me bring you up to speed. The boomer generation is becoming one of the fastest growing segments of our population which will put a tremendous strain on Social Security and any retirement system. At the height of retirement there will be fewer workers contributing to those programs then the baby boomers drawing from it.

Faced with the sobering facts that Social Security and other retirement systems might fail baby boomers have begun to investigate other alternative income opportunities. The first, most obvious, place would center around the equity in their home. For years baby boomers have heard that they could rely on the continued growth in appreciation of their primary home. So when retirement came they could either sell that home and purchase a retirement home or they could simply pull the equity out of their primary home with a mortgage loan using programs like reverse mortgages. Since 1968 real estate has appreciated each year continually approximately 6.7% per year until this past year.

Now the table has not only turned but has tipped over on its side. In the past year many baby boomers have lost a considerable amount of value in their home. Some who purchased within the last 4-6 years could owe more money to the mortgage lender then their home is currently worth. This is commonly referred to as an upside down position and that is not a very good position to be in. Instead of being able to count on the normal yearly appreciation people are finding that if they sold today... and that is a big if, they would need to pay additional money from their own funds to remove the mortgage from their property. Of course, that also depends on someone wanting to buy the home today. Home buyers are increasingly more skittish and skeptical about where the current real estate market is heading. Their main concern is falling into that upside down position themselves in a year or so. This hesitation is creating a over abundance of homes to be sold, which in turn further deteriorates the housing market. So in short... homes no longer provide a means for receiving income as anticipated.

Okay you say, baby boomers still have their stock investments and 401k accounts. Maybe not... one of the biggest fears baby boomers have today is not having enough money in their retirement fund and the possibility of out living the fund. The latest crises haunting baby boomers has come from the stock investment arena. The financial markets are in tremendous turmoil and showing signs of continued sell offs almost daily. The news channels constantly report sharp drops in stocks which make up a good portion of baby boomers 401k accounts. Baby boomers had been counting on the stock markets providing extra income in addition to selling their home. Lately investing in the market has required a strong stomach and lots of time to ride out the down turns in the markets. The problem now is that most baby boomers no longer have the years available to ride out the current down turns.

So what advice is being given to the baby boomer watching his equity disappear in his home and his stocks reach new lows each week? Many analysts suggest increasing your savings that you contribute each month. For some reason it kind of sounds like throwing the baby out with the bath water... why increase savings when the markets continue to slide lower and lower? Keep in mind that baby boomers are also facing the constant increases in both food and fuel costs. That constant rise in pricing has erased what normally could have been the extra to contribute to their savings. Their retirement account and equity in their home begins to look very empty.

Isn't there some other way?

Other than continuing to work baby boomers have begun to explore the internet for income producing ideas. Today's internet offers a ga-zillion different get rich quick programs. Just wading through all the long explanations, pictures of piles of money and all the hype to get you to buy their program can become a huge challenge to the ever frustrated baby boomer. Not knowing where to turn for advice many baby boomers try several "rags to riches" programs only to find that after they put their money on the line all the support vanishes as the hype seller concentrates on the next target. Don't let this happen to you!

Before you plunk down 1 cent of your money - check out the organization or team behind the claims. Attend several training sessions before deciding whether their program is a good fit for you. You will be surprised just how many programs have "0" training and push the subject away by saying how simple their program is that you will not need training. The internet is full of crushed hopes, holes where money used to be piled and the feeling of being left out in the cold. Baby boomers will again feel frustrated and lost. Don't let that happen to you... search until you find the right team to be a member of. Make sure they provide training, income producing ideas that don't all cost to keep up with the team, or any of that nonsense.

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