The COVID-19 Economic Turmoil’s Impact on Baby Boomers sponsored by Todd Carmack
As per Todd Carmack the impact of COVID-19 on every sphere of human life, especially on the economy, has been drastic and out of bounds. The damage caused by an invisible virus will take a lot of time and effort to overcome economic fiasco. However, one thing is clear that it has changed people for good. The older citizens of society are those affected by this pandemic. It has worked to destroy their retirement plans and life goals; i.e., the glorious seventies.
The data collected from across the world shows that the people who are above 80 have the highest mortality rate due to this novel COVID-19. Todd Carmack said the numbers are a little less severe for those above 70, but still a lot higher than younger people. The virus becomes even more deadly for those who have a history of chronic diseases and health failures. Thus, this pandemic has sounded a death-knell and became a global emergency for baby boomers.
Baby boomers—the people born between 1946 and 1964—represent almost 20 percent of the population of the United States. A huge chunk of them is still actively working in the market and will do so depending upon the current economic turmoil. About a fifth of boomers provide eldercare to either their parents or loved ones. This leaves them at the front lines of sufferers due to this global pandemic, and Todd Carmack said it has only added to their dismal vulnerability by highlighting the inability to help directly.
Here, in the United States of America, the largest cluster of deaths has been reported in a nursing facility, and the government has turned it into quarantine. This has limited the entry and access to the facility except by medical personnel or in “end of life situations.” Therefore, depending on the longevity and severity of the current economic havoc and the necessary steps needed to isolate and contain this virus, the following could be long term impacts on Boomer’s retirement.
Young Boomers will Suffer More.
A study showed that the younger boomers (the people born in 1960 or later) would be affected much more by this economic turmoil of COVID- 19 than the older boomers (born in the 1940s). This is due to the global economic recession of 2008, which slammed late boomers greatly snatching off their labor jobs, and many settled for lower-paying jobs with retirement plans. Due to this reason, the late boomers accumulated much less Wealth in terms of 401(k) (a retirement savings plan sponsored by an employer) and the IRA (Individual retirement account) money. In 2016, even after the seven years of the great depression, the late boomers 401(k) balance was on a downward trajectory than before. This means they have to accumulate more to have the same level of retirement savings than early boomers. Another survey conducted shows how this crisis will affect late boomers more and followed by Gen X (people born between 1965 and 1980). Thus, the economic crisis of COVID-19 will wreak havoc on late boomers and strip them off from their job security.
Working Longer Will Get Harder
The old factoid that each day 10,000 boomers turn 65, the retirement age, has been put to question in recent years amid the continuous shrinkage of baby boomers labor force up to 5,900 per day since 2010. This is due to the reason that this generation has outrun the previous two generations (Silent Generation and the Greatest Generation) in working hours, supported by the fact that in 2018, 28 percent of the oldest boomers were looking for jobs. There has been a sharp increase among old workers who want to work past 65 and retire afterward or might never. While this desire is rising, the harsh reality is that once these boomers lose their jobs, only one in ten percent gets the same benefit again. The rest have to compromise their retirement plan or social security benefits, rendering them to the overall low accumulation of Wealth, and therefore, working longer will get harder.
Boomer’s Wealth will be Affected More by Panic.
A major blowback effect of COVID-19 is that it has created great panic in the bear market, and the investment is on a nosedive. The sinusoidal activity will enable the market to rise again after COVID-19. Still, the Boomer might not be able to gain the benefit as happened in the 2008 economic crash when many pulled out investments and missed the 2009 rebound. The issue lies in human mentality, which pursues to liquefy stocks in the crash, and one ends up on the losing side after the quick recovery of the market. As explained by financial planner Kristin McKenna, in the S&P 500, the best daily gains occurred after the worst ten days of the market. Had one stayed in those days, one would end up earning more than those who pulled out. Thus, it is extremely important for boomers not to dive into this panic and survive through this economic crisis by maintaining their financial status in shape.
The Cash Bucket Strategy Will Get Fame
The current economic crisis will give favor to the famous “Cash Bucket Strategy” (dividing retirement into three distinct phases) by alluring retirees to swim through the current crisis and champion the risk of payment return. The reason is that: even if the market is flourishing during your working years, you might run out of money if the economic crash occurs in your early retirement years. Thus, having a cash bucket strategy in place would help a lot in troublesome times. For example, during the first phase of the strategy, one could have enough cash for the first three to five years in the form of bonds or laddered CDs. Thus, it will help many boomers to get through this economic turmoil without losing much of their economic status and retirement savings during the COVID-19 financial crisis.
Cruises Will No Longer be on Bucket List
Peaceful and hustle free post-retirement life is a dream of almost every Boomer. For that cause, supported by a recent survey, the 2020 travel plan of boomers shows approximately $7,800 on travel, including international travel. Moreover, a good third of boomers’ international trips include staying at cruise ships.
Now, during these global pandemic and panic times, it would be hard to say that the boomers will completely give up their traveling plans. However, staying at a cruise ship might be off the list. This has to do with much-circulated news of many passengers trapped on cruise ships and fearing their life among the COVID-19 outbreak. Even though the cruise industry has recovered from many previous health fatalities (including recent norovirus and influenza outbreaks), this threat seems larger and will leave a longer imprint on boomers.
More Importance will be given to Family Time.
The effective way to avoid COVID-19 is by social distancing, and staying at home means more family time. This has been one of the main reasons for boomers to pursue their retirement rather than by ill health, financial troubles, or domestic woes. Over the years, it has been seen that planning trips with extended family and friends have been the major reason for boomers traveling. Being closer to their families is also a top-notch reason for boomers’ retirement plans. Thus, in this regard, Todd Carmack said COVID-19 will act to draw people closer to each other by helping boomers to fill in the intergenerational gap with millennials and have quality time at home during the quarantine.
Aging at home will become More Compelling.
Amid stripping off cruises from bucket list and nursing home horrors for boomers, the COVID-19 will leave a long-lasting imprint not only on boomers’ minds but also on their adult generation. Aging in place of their marriage, mortgages, and memories is the topmost priority for boomers. But this desire to age at home precedes boomers. A recent study shows that among 20,000 homeowners, 53% move back to their home at 50. Another 17% after retirement, and the remaining 30%, move back home depending upon their financial troubles and health woes after retirement. In this regard, the IoT (internet of things) will affect people’s behavior and help them stay at home by controlling their activities, i.e., pill reminders by remote caregivers. This technology will not only be around us but inside us, like mom has a smart glucose sensor under her skin transmitting and adjusting her insulin levels.
Nursing Homes and Facilities will Change for Good.
The growing desire among boomers to age at home has wreaked havoc on nursing facilities, and more than 550 facilities have been closed due to high cost and reimbursement pressure. However, it is unlikely for nursing homes to vanish entirely as a last resort, but they will be undergoing important changes over time. This includes hiring health care professionals and experts at nursing homes to look after the boomers. Moreover, the rising trend of senior housing and assisted housing developments will be affected in the future, as they will be looking to spread out more and avoid contagions in case of an epidemic.
As rightly said by Coughlin that the early mantra of “social-distancing” for the elderly has turned into “self-isolation” for all. This is a watershed event in medical history, and the boomers coming on the other side of this pandemic COVID-19 will be much different than those before the event.