I think a lot boomers are living in fantasy-land when it comes to the realities of a retirement without earning supplemental income.  We’ve always been about living in the now.  But If you’ve estimated how much income you’ll need to maintain your standard of living after you retire — and how long that income must last with our extended life expectancy,  it’s a pretty daunting revelation.

For a 55-year-old who earns $150,000 a year, planning to retire at 65 on 80% of current salary, and looking for that income to last until age 95 (who knows) – the number is, shockingly, around $3 million – if you assume a 4% annual withdrawal rate. I’m excluding social security, any pensions, and any home equity you can take out when you downsize (good luck with that).   I’m also not including taxes on the IRA withdrawals (which you have to pay on your gains unless it’s a Roth IRA).

I know $150,000 is a lot of money in many parts of the US, but in the SF Bay area it’s enough to live a solid middle-class lifestyle, where the median home price is in the $650K range and gas is $4.20 a gallon.  But if you think that’s crazy and you can get by on half of that amount, or $75K a year, you’ll still need a cool $1.5 million.  If you’re in some other area of the country where the cost of living is even lower, then maybe you can cut it in half again, and get by with a mere $750K target in your nest egg.   Having that amount might give you about $30K total income per year – again excluding social security, pension (if any) and taxes.

And how do we stack up against that?   Here are a few enlightening measures (from various sources noted) to give a general picture:

• 36 percent of Americans say that they don’t contribute anything to retirement savings beyond their social security (Employee Benefit Research Institute, Washington DC)
• Only about 15 percent of Americans currently have a traditional pension plan, according to the Employee Benefit Research Institute.
• The average 401K balance is about $72,000.  (Money Magazine, October 2011)
• The average homeowner now has 38 percent equity, down from 61 percent a decade ago according to the Federal Reserve (June 2011).   If your home is worth $250K, that’s about $95K in equity, assuming you can sell and cash out without using that money for somewhere else to live.

We need to get real, or plan to live on a lot less.

http://money.cnn.com/magazines/moneymag/retirement_guide/

After the demise of company pensions in all but a few union industries, I had to take responsibility for my own retirement planning and saving, like most of the baby boomer generation.  I have regularly contributed to the max in my 401K. We also used to receive a company match – but that went out the window in cutbacks by my employer a couple of years ago.  The financial turmoil of the past few years has decimated my account balances, despite my attempts to continue contributions and diversify the types of investments, the industries, the geographic concentration, domestic vs. international, and dollar cost averaging.  Whatever.  I feel tricked.

I feel as though all my investment money (and the billions aggregated from all of the boomers) have served as nothing more than Wall Street’s cannon fodder.  Our money became “play funds” for investment managers and Wall Street traders, who took a massive piece of it for themselves in the process. When the trading charades collapsed, we then supported these institutions through financial bailouts with even more of our money.

Ominously quiet, the baby boomer generation has sat idly by on the sidelines watching their economic future being ruined by the actions of Wall Street amidst government policy and regulations driven by a plutocracy of the wealthiest campaign contributors.

For the past couple of weeks, there has been a quiet protest brewing in New York City with people angry with Wall Street.  Yesterday, as these protestors began moving to Union Square, it became somewhat chaotic and the NYPD stepped in with a heavy hand to stop the assembly.

I hope that our government leaders will start to pay attention to people’s anger and frustration. The inequality of income distribution in the US is statistically one of the worst in the developed world – on par with some countries in Africa.  People are hurting in every demographic in this country –  but in particular we are destroying the economic future of millions of  young college graduates and the economic security of 76 million boomers.

Watch what is happening in New York.  It may have started out of frustration by the young and the unemployed, but the baby boomers interests are intermingled with Wall Street even more.  We can not sit quiet and idly by.  We need to peacefully raise our voices, and let the political and corporate leaders of this country know that enough is enough. The plutocrats don’t get to both ruin everyone else and keep us quiet.

http://cityroom.blogs.nytimes.com/2011/09/24/80-arrested-as-financial-district-protest-moves-north/?scp=2&sq=city%20blog&st=cse