December 27, 2005
Tuesday

The generation that didn't trust anyone over 30 starts turning 60 New Year's Day as the first of 76 million baby boomers confronts how to keep the celebration going for the next 20, 30, and even 40 years they are likely to live.

Their collective $2-trillion-a year spending power gives them twice the financial muscle of their thrifty parents, who learned savings habits the hard way as Depression-era babies. That financial factoid alone should make boomers an inviting target for marketers hoping to influence how they spend and how they save their money.

It's been that way since birth: Boomers have been the proverbial "pig in the python," as money manager Harry Dent puts it, setting trends from Dr. Spock's spoiled kids to the "summer of love" and Woodstock era to today's double-income families.

Trend-setting isn't about to change now that leading-edge boomers are looking at gray hair and gravity: They're old enough to tap their 401(k) retirement plans without penalty and two years from collecting early-retirement Social Security checks.

Trouble is, with traditional pension plans in jeopardy, with General Motors' suspension of its 401(k) plan matching contributions, and with boomers 50 and older reporting only $50,000 in retirement savings on average, survey after survey shows most boomers expect to work past the old retirement age of 65.

Boomers turning 60 in 2006 include George and Laura Bush, Cher, Susan Sarandon and Donald Trump. But not every soon-to-be sexagenarian shares their fame or fortune: Sales clerk Karen Monahan, a stay-at-home spouse from suburban New York until divorce sent her to work and into debt at age 50, expects "to work till I die."

"There's all this money, but there's all this debt from college loans to home equity lines of credit to credit cards that don't let boomers build a retirement nest egg until their late 50s," says business professor Mary Furlong of Santa Clara (Calif.) University.

To Furlong, who sponsors a yearly Boomer Business Summit to brainstorm financial futures, "Longevity holds opportunities for boomers, but it has challenges, too, starting with financing their longevity." Such expectations beg two questions, she says:

- Will boomers be able to work?

- Will the jobs be there for them?

On the first count, the proportion of Americans still working at 65 and older fell steadily after World War II until the 1980s, when fewer than 1 in 10 held jobs. But the Labor Department has seen an uptick lately in senior labor-force participation: 20 percent of men and 12 percent of women 65 and older report being in the workforce.

Boomers also express a new work ethic that "we'll work until we drop," says economist Robert Willis, director of University of Michigan's Health and Retirement Study. If past is prologue, he says, there will be "a strong relationship between boomers' expected retirement and actual retirement."

A new Putnam Investments study of work-in-retirement lends strength to those projections: It found that 7 million retired Americans - about a third - have returned to work at least 15 hours a week. Most stayed retired for less than a year, with two-thirds reporting that they went back to work because they wanted to, not because they had to.

"Our study shows retirement in the United States has already moved far beyond ending work at age 65, gold watches and early-bird specials," says Putnam's William Connolly.

But the facts also find the typical worker still retiring at 62, with layoffs and health problems largely responsible, the Employee Benefits Research Institute reports.

At the same time, retirees and boomers looking for work face a labor market that's projected to be short on white-collar jobs and long on retail, construction, health-care and other work that requires physical stamina, not executive skills.

The Putnam study found that only 40 percent of current retirees who went back to work do anything that resembles their former job. Forty percent also report that their new job requires less education and training.

And, like it or not, "ageism is still a problem," gerontologist Robert Butler told this month's White House Conference on Aging. Butler, the first National Institute of Aging director, coined the word "ageism" back in 1969 and it still applies, he says.

"Ageism won't be eradicated until U.S. employers and businesses are fully capable of understanding that 1 in 3 Americans will be 50 and older by 2010 and that skills shortages will require their labors," adds Brent Green, a Denver consultant and author of "Marketing to Leading-Edge Baby Boomers."

He cites political consultant Paul Begala's portrayal of boomers as "self-centered, self-seeking, self-interested and self-absorbed" as a wake-up call for boomers "to the reality that they are an aging population to which many negative images apply."

Overcoming these biases will take work, even though boomers are 76 million strong and households over 40 hold 91 percent of America's net worth, Green says.

Even so, Linda Barrington, research director of the Conference Board, Corporate America's think tank, says, "Employers must be more open to maturing workers who are looking to start a new cycle of training and education or to older workers who are cycling back into the workforce. Baby boomers will redefine retirement because 'working in retirement' won't be an oxymoron anymore."

Boomer power seems inevitable to National Association of Financial Gerontology president John Migliaccio of White Plains, N.Y.: "Like Willie Sutton said about banks, it's where the money is," he says.

Financially, he notes boomers are more at ease than their parents with the stock market, thanks to IRAs and 401(k) plans, but they still need help to make their money last a lifetime. That's the case, whether they work or not in retirement and whether they're in the retirement-minded 55-to-60 cohort or are young, trailing-edge boomers saddled with home mortgages, car notes, orthodontist bills and college savings accounts.

Boomers increasingly take the entrepreneurial path. Entrepreneurs over 40 account for 54 percent of the self-employed, up from 48 percent in 2000.

Furlong, an entrepreneur herself, agrees that entrepreneurship is one option for creative boomers willing to apply their corporate skills to independent thinking.

Her business summit tries to foster entrepreneurship through a $10,000 yearly prize for the best business plan. This year's contest drew 85 entries. The winner was Tibion Corp., an orthopedic medical device manufacturer whose first product, the PowerKnee, helps people with knee problems climb stairs, get out of chairs and perform other tasks for less than the $6,000 price of a passive knee brace.

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