Boomer Backlash

I have noticed an increasing level of hostility and anger directed at Baby Boomers by younger generations on social media recently.

The theme is that Baby Boomers had everything go there way during their lifetimes.

They were able to buy cheap houses and got rich from real estate along with rising stock prices.

Many are receiving Social Security benefits even if they have other sources of income.

They were not saddled with a lot of student loan debt.

It is so unfair!

Let's call it Boomer Backlash.

I am not sure how real it all is.

It would not surprise me if some of it is coming from Bots originating in Russia or China attempting to create more discord and division in the United States.

They are already pitting Black vs. White, rich vs. poor and men vs. women.

Why not pit the Zoomers vs. the Boomers?

Here are a couple of examples of the Boomer Backlash I have seen on X over the last month or so.

This is the reaction of one Zoomer when  confronted with the data that shows that Zoomers are actually earning more in inflation adjusted dollars than previous generations did at the same age.

He says Zoomers are much more productive and create more economic value than Boomers at the same age.

I guess that it is partially true. Boomers did not have emails, word processors, GPS or an iPhone in their hand to look up everything they ever needed to know at that age. 

Here is an interesting take from a generation that has been slow to marry and have any children themselves.

Here is another one with house envy.

https://x.com/MichaelAArouet/status/1992266496874357142

Yes, those summer internships really paid well in 1991!

I recall that a lot of internships in my day did not pay anything.

That would be illegal today.

Of course, let's not forget that most Boomers were well into their 30's in 1991.

The youngest Boomers would have been 27 in 1991.

It seems like a lot of those on social media bashing Boomers do not have a very good historical perspective.

That is particularly true in the following post on X that believes that no generation won the genetic lottery like Boomers.

He seems to believe that everything went their way in every way.

https://x.com/BoringBiz_/status/2004054150984749117

Through his invention of a mythical John born in 1946 he shows everything going his way.

John avoided World War II.

John was able to pay for college by working for minimum wage at an ice cream shop in high school.

He somehow believes that John was smart and decided to contribute to Social Security in those early years as if paying FICA was optional.

John gets a job as an engineer out of college and is able to buy a house with four years of savings.

He somehow believes that Medicare being enacted in 1965 was a massive windfall for John to pay for his retiree health costs.

He believes that the invention of the 401(k) and IRA provisions in the Internal Revenue Code allowed John to build up a massive stock portfolio to go with the appreciation in value of his house.

He has John buying an investment property after the Great Financial Crisis taking advantage of low interest rates created by the Federal Reserve that provides him even more real estate appreciation.

He concludes his story this way.

What did not get into his story?

What about the John who graduated college in 1968 (22 years after 1946),  immediately got drafted and found himself in Vietnam where he was killed in action in 1969?

His name is now on a wall in Washington, D.C.

That John did not win the genetic lottery.

There were many other John's that served in Vietnam who came back to the United States to be cursed and spit on for serving.

Those Boomers did not win the genetic lottery.

After they went through that Boomers sat in lines miles long to gas their cars up during the Arab oil embargo in 1973-74.

That was followed by having to live through a 9% inflation rate in 1978, 13.3% in 1979, 12.5% in 1980 and 8.9%in 1981.

Paul Volcker and the Federal Reserve finally solved the inflation problem but it took an 18% federal funds rate in 1980 (it is 3.5% today and many think that is too HIGH!) to take the teeth out of inflation.

However, those high interest rates resulted in a 11% unemployment rate in 1982. The unemployment rate reached 13% in Ohio where I was living at the time.

Many John's found themselves laid off or having to look for a new job or career in the early 80's.

If John wanted to buy a house in October, 1981 he was faced with an 18.6% 30 year mortgage rate.

No Boomers thought they won the genetic lottery when they faced these challenges.

It is also nice to talk about the wealth building possibilities of 401(k) plans and IRA's if you start investing early.

However, in the 1980's and 1990's when those retirement alternatives were first made widely available, most Boomers expected to retire with a pension from work just as their parents did.

They did not take advantage of those early compounding periods because they were relying on the promise of a pension payment for life.

However, as they got into their mid-40's to mid 50's they saw many employers discontinue their pension plans in favor of 401(k) plans. These plans are great if you have 40 years to accumulate your retirement nest egg.

They are not quite so advantageous when the accumulation period is only 20 years.

Today you generally only find pension programs with government jobs.

Baby Boomer John also saw his FICA tax rate increased substantially in the 1980's and his retirement age  increased in order to qualify for full benefits

His father paid a FICA tax rate of 1%-4% most of his career on a very low maximum earnings base.

For example, in 1970 the maximum employee Social Security annual tax contribution was $328.

In 2000, it was $4,724.

In 2015, it was $7,347.

The parents of Boomers made a nice return on their Social Security contributions.

That is not the case with the average Boomer today

A median income Boomer with an average life expectancy is receiving at best a 1%-2% real return on their Social Security contributions. That is half of the historical long-term real return on government bonds and only a fraction of long term real return on stocks (7% on large caps).

Boomers at high income levels are actually in negative territory on their returns on Social Security contributions due to the progressive benefit formula that favors lower income workers.

As far as Medicare goes, it is a nice cushion for Boomers. However, it was a much better deal for their parents who had to pay Medicare taxes for only a portion of their careers staring in 1965.

However, Medicare is hardly free as the Zoomers seem to believe as they promote the idea of Medicare for All solving all healthcare issues..

As I wrote recently, the average Boomer couple with Medicare Part B, Part D and Medigap coverage is likely paying close to $1,000 in premiums per month for their "free healthcare".

And this is after a lifetime of paying Medicare taxes while working.

It is true that the last 40 years have seen uncommon gains in home values and stock and bond value due to declining interest rates over that period. The wind has been at the back of those who were investors.

However, many Boomers missed the gains due to career disruptions and job changes.

That is why you see headlines like this in The Wall Street Journal.

Source: The Wall Street Journal

It tells the story of Lynn Lee who at age 65 is dealing with the fourth layoff of her life.

"After every layoff, Lee found something new. Now, she was at retirement age. But like many older Americans with little savings and heavy financial burdens, retirement was out of the question."

It seems it is always easier to look at someone else and say they got all the breaks.

Or to believe that you can't get ahead because someone else is holding you back.

Every generation faces challenges.

I fully understand the frustrations of many young people today. 

College, housing and healthcare has gotten a lot more expensive since the Boomers were young.

However, is it a coincidence that each gas seen more and more government involvement and intervention over the years? And yet, young people seem to want the government controlling even more of the economy.

Do they not understand the correlation?

I understand their frustrations but they need to put everything in better context.

The reality is that younger generations of Americans today have probably faced far fewer challenge than any in history.

There is no question that is the case compared to Baby Boomers.

And we don't even have to bring up those in the Silent Generation who had to live through both the Great Depression and a World War.

A tough job market today? Try finding a job with 11% unemployment.

Expensive homes? Yes they are costly. However, I bet that prices would come down a lot with 18% mortgage rates.

Struggling with student debt? No one forced anyone to go to college or to major in Gender Studies,.

Boomers typically did not go to college if they could not afford to do it because there were few student loans available. It is also true that college would not be so expensive today if it were not for the availability of that student loan money.

Zoomers should pay heed to some lessons that are eternal. 

Put aside your anger and envy.

Forget about bashing Boomers and take what life gives you and make it better.

Job 5:2 (NKJV) “For wrath kills a foolish man, And envy slays a simple one.”

Proverbs 14:30 (NKJV) “A sound heart is life to the body, But envy is rottenness to the bones.”

Zoomers will see their time come. The current challenges can be overcome with faith, fortitude and flexibility in dealing with a future that undoubtedly offers more possibilities and potential than was ever available to any Boomer.

Life does not get better by bashing someone else.