Baby Boomer Innocence is No Excuse

I much appreciate a comment I received on my Post about Apathy of Baby Boomers to take control of their nest eggs. I do believe there is a lot of truth in the comment that Baby Boomers are innocent when it comes to their retirement nest egg. But I contend this is unacceptable in an adult in their late 50’s and beyond who is or is about to retire.

In many countries around the worlds where compulsory contributions are taken out of salaries each month for all workers they can be forgiven if they lose sight of this money. Many young people today will wait 40 years or more before they see any of that money. It becomes unreal and may just be considered another form of tax. If you can’t spend it when you want to then just forget it may be the lament.

Innocence occurs because the time horizon is too far out to be of concern, plus in the early years the amount are so small as to be of no consequence. There is a total disconnect between the retirement money, the investor and the fund manager.

Baby Boomers started late saving for their retirement. So they are behind the eight ball to start with. But some baby boomers have been in pension funds for 20 years or more so the same disconnect can apply.

Most compulsory retirement schemes are managing through employers and they often choose the fund managers and control the processes. There appear to be very few requirements for the funds to report back to the investors with meaningful and understandable annual reports. Their client is the employer not the employees – even though it is their money. Until recently many employees were locked into their employers schemes and probably felt they had very little control over them anyway. So it was all too hard and best forgotten.

Governments around the world have tried to give workers more control of retirement funds but with such long time horizons many people don’t see a problem.

Personally I find it a recipe for disaster to be forced to give money each week to some fund manager somewhere whom I have never met and who gets to do whatever they like with it (financially speaking) for the next 40 years. (For the record I managed my own superannuation all my working life). Democracies change governments every 4-8 years partly to avoid entrenched corruption, yet we let the fund managers keep our money for all our working life with a disclaimer that they do not even have to protect our capital. You know the phrase, “Past Performance is no Guarantee of future result”.

The problem is after a while the fund managers lose track of what the money is primarily for and that there is a real person somewhere whom they have never met who is relying on them to start giving them back their money after 40 years so they can live off it. That is a big ask – force on us by well-meaning governments.

Maybe what we should have is “meet and greet” evenings, where fund managers are forced to go visit their investors and present their results and fees and charges face to face. Then maybe they would connect the money with real people and take a more responsible approach to looking after that money.

It may also overcome the innocence of baby boomers because they will have been fully informed.

Baby Boomers are definitely innocent in the ways of the financial world’s fees and charges that can seriously erode their nest eggs over time. It’s not helped by the way the financial world often hides these fees and charges. But again baby boomers will find plenty of information to help them ask the tough questions if they just look. This blog has made no secret of the problem with fees and charges.

In the early years when the nest egg is small 2% of $10K, $200 per year many be acceptable. But as that money grows to $100K the fee becomes $2,000 per year and on $1M it is $20,000 a year. At some point baby boomer cannot plead innocence. Giving someone $20,000 a year to manage your money in the same way they managed $10,000 is not innocence – it is stupidity, if you do nothing about it.

Sorry to be blunt but innocence is no excuse for letting them take a large proportion of your nest egg from you over your working life and then letting it persist when you retire.

I am not saying you should not pay a fee. I am saying you should pay a fee for good service from a financial planner dedicated to protecting your nest egg and to helping you mange it in retirement.

If you are in an employer retirement scheme and cannot get the control you need to have in retirement, then you need to consider moving your nest egg into an account where you and your financial planner can have direct control of it. Most countries have legal ways for you to do this. Drop the innocence and find out.

In my research I have found a huge amount of information on retirement, mutual funds, fees and charges, annuities, calculators, bonds and many other related topics. Many of my posts on this blog include links to that information for free.

But even after all that the main things you need to know or at least be aware of are the costs to your nest egg like stock market losses, fees and charges, inflation and taxes. Getting control of these will have far more effect on your nest egg than chasing high risk high returns. Costs can be controlled to a great extent. Returns depend on the fund manager and the markets – both out of your control.

Make it your business to either know about these costs yourself or find someone who you can trust to help you manage them. Innocence is no excuse for baby boomers in retirement. So get moving please.

If there is enough interest I will do some research and write some posts on resources we can use and steps we baby boomers can all take to get control of our nest eggs in retirement. Please comment below if you are interested, or send me an email if you prefer. I do not use anyone’s name on my blog unless permission is given.

One Response to “Baby Boomer Innocence is No Excuse”

  1. […] Jack Bell wrote an interesting post today onHere’s a quick excerptI do believe there is a lot of truth in the comment that Baby Boomers are innocent when it comes to their retirement nest egg. But I contend this is unacceptable in an adult in their late 50’s and beyond who is or is about to retire. … […]

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