The Baby Boom generation, the nearly 80 million of us who were born between 1946 and 1964, is the largest in U. S. history. Its size alone guaranteed that Boomers would be our most influential generation, and indeed their impact on the country’s social, cultural and economic institutions is unprecedented. A “pig moving through a python,” as the Baby Boom generation has been aptly, if somewhat unpleasantly characterized, is responsible for the youth movements of the sixties, including those advocating civil rights and feminist issues, as well as antiwar protests. As they entered their twenties, recoiling against the excesses of the Nixon presidency and the Vietnam War, Boomers adopted a culture of excess, coining the phrase “Don’t trust anyone over 30,” deeply critical of their parents’ conservative values, especially those involving spending and saving.
Boom Times. Boomers have spent wildly and lavishly on themselves, certain that the economic prosperity that followed World War II would continue indefinitely. They turned into the “Me” generation, its purpose, “Shop ‘till you drop,” its goal, “He who dies with the most toys wins.” In a direct rebuke to their parents, Boomers spent rather than saved, driven by wants rather than needs. When the first wave of them decided to buy cars, the auto industry instantly responded, gearing up to produce new cars at twice the rate of growth of the American population.
Similarly, the housing supply was insufficient to meet Boomers' needs, and the unprecedented demand for the limited supply of homes ratcheted up housing prices, which eventually produced the “McMansion” phenomenon. These are 3,000- to 5,000-square foot homes especially designed for Boomer couples wanting luxurious spaces that would confirm their opulent lifestyles. Indeed, the McMansion reflects an especially powerful Baby Boomer trait: success deserves to be visible. Trophies and lifestyle choices are the best evidence of a lifetime of achievement.
Now in early- and mid-middle age, between 45 and 63 years old, the Baby Boom generation was, until very recently, wealthier than any other age group, controlling 70 percent of the total net worth of American households--$7 trillion--owning four-fifths of all money in financial institutions, and accounting for nearly one-half of total consumer demand.
Boom Bust. Unlike their predecessors, whose accumulated savings funded their retirement, Baby Boomers have counted on their assets to deliver needed wealth. The spectacular performance of the stock market and the recent astounding appreciation of housing values produced the results that are summarized above.
However, the stock market lost 47 percent of its value between September 30, 2007, and December 2, 2008, a decline of about $11 trillion. This has primarily impacted older Americans, whose retirement accounts lost $2.8 trillion, or nearly one-third of their value. (http://www.urban.org/publications/901206.html).
Equally devastating is a recent report by the Center for Economic and Policy Research (http://www.cepr.net), which concludes that the collapse of the housing bubble has decimated the holdings of the vast majority of near retirees, who will have little or no housing wealth this year and will be almost totally reliant on Social Security and Medicare to support them after retirement.
Boom Bust and Senior Housing. It has long been assumed that Boomers’ post-retirement housing would mirror the opulence that has typified their existence, high-quality, amenity-rich living with enhanced amenity packages, including a library, movie theater, lounge and billiard room, beauty salon and barber shop, chapel, heated swimming pool and hot tub, bistro, formal dining room and activities rooms.
Independent living communities will be expected to offer a range of technological amenities to meet the expectations of this tech-savvy generation, including building-wide wireless Internet access, computer labs outfitted with software intended to challenge and stimulate residents' minds, and Internet cafes and bistros where they can take their laptops and socialize with others while surfing the Web.
Some senior housing developers and marketers are beginning to pay close attention to the impact of the current economic downslide, which has drained many Boomers' savings and devastated the value of their housing. The fact is that the collision between economic reality and the expectations of Baby Boomers about the quality of their post-retirement housing will dumbfound this, the “entitlement” generation. Expecting McMansions, nearly destitute Boomers will likely encounter retirement housing on a par with their first apartments.
And what about Boomers who at some point will need long-term health care? Those who are relying on Medicare to cover its costs will be equally dumbfounded: Medicare doesn't pay for long-term health care. Boomers themselves will be writing the check for the $2,500-$3,500/month cost (in current dollars) of assisted living, the $4,800/month cost of nursing homes--or the $8,000/month cost of round-the-clock in-home health care.
Only when Boomers' personal assets are gone will a government agency, Medicaid, get involved. Medicaid's the one that helps the poor and disabled, which means that the costs of care for the overwhelming majority of Baby Boomers will be paid from state or federal funds. Medicaid, the program that was established to pay for the healthcare needs of the poor and disabled, will rapidly be transformed into the long-term care insurance program for America’s Baby Boom generation.