When I graduated college in 1977, I joined millions of fellow boomers in a job market that was, in a way, eerily similar to the one today’s graduates are encountering. The country was suffering through a deep recession, complete with rising inflation, gasoline shortages and unemployment percentages flirting with double-digits.
Brought up in the prosperity of the 1950s, and having lived through the social upheaval of the 1960s and the early 70s that included assassinations, the Vietnam War and Watergate, we were a skeptical generation intent on changing the world past generations had created for us.
We spawned the technology boom. We’ve had a profound impact on the ways in which we, our children and now our grandchildren work, play and communicate. But, more importantly for me, it changed the way we approach money. Never before has a generation had more choice and freedom when it comes to managing its financial future. Technology has helped improve everything about the way we interact with the stock market, from accessibility to efficiency, speed and, the great equalizer, price. It helped pull back the curtain on Wall Street so that Main Street could have a say.
Today, we don’t have to depend on someone else to make decisions about our money - unless we want to. We can create and manage our portfolios independently, thanks to the tools, research, education and products available to anyone who wants them. We can find experts who can talk us through our options – in a language we can understand – with the push of a button. It's a world that I can't imagine my parents navigating, but one in which I would expect nothing less from my children, and it gives me great pride to have helped create it for them.
But this change didn’t come without its challenges. We have been tasked with managing through financial setbacks associated with Black Monday, recessions in the early 90s and 2000s, the tech bubble and, of course, the current financial crisis, which unfortunately will also be a significant part of the boomer legacy. Each challenge has taught us more about the financial world and changed how we approach the stock market and how we hedge ourselves against what’s to come.
If anything, these challenges have dealt us a healthy dose of reality. According to a May 2009 survey conducted by Opinion Research Corporation on behalf of TD AMERITRADE, 30 percent of those aged 50-64 expect to “downscale” their lifestyle, with a focus on simply paying the bills and remaining independent.
There is a big difference between the current financial crisis and those we have faced in the past - time. It has been relatively easy up to now for us to bounce back from down markets because we had time to learn, time to adjust and, more importantly, time to recover. Now we’re hearing that more than half of those aged 55-64 are worried about outliving their savings, and a quarter of these Americans don’t expect to retire until after age 65. Another 15 percent don’t expect to retire - period.
A quick and speedy economic recovery would be helpful, but the reality is that the recovery period for a financial crisis is historically much longer than that of a “normal” recession. While we’ve passed the bottom of this cycle, we’ll be dealing with a difficult economy for some time. That’s not an ideal environment for entering our golden years.
Reform is the word of the day in Washington. The financial crisis revealed some troubling aspects of our financial system, which need to be addressed: flaws in our housing and real estate lending, the use of excessive leverage on the part of financial institutions, and inadequate capital and liquidity buffers. There are many proposals floating through the various branches of government – everyone seems to have an opinion when it comes to bringing us out of this economic downturn.
Wall Street needs to take responsibility for what has happened, but it should be done in a way that does not have unintended consequences for unrelated parties – like the millions of retail investors, including we boomers, who are just trying to get back on their feet. We need to be mindful of any such consequences that might come out of new legislation – no matter how pure the intent may be. The last thing Main Street needs is decreased choice and increased costs at a time when preparing for retirement means hanging on to every cent you can save.
As someone who has spent the last 30 years working in financial services, I have a unique appreciation for the magnitude of what we are undertaking. Change can be an uncertain time, and we all know that the older we get, the less open to change we tend to be – and for good reason – as there’s less time to recover if you make a mistake.
Perhaps its time for boomers to take a page out of their own playbook and change the way this country thinks about retirement. Follow the proposals taking place on the reform front. Speak up if you have an opinion – make your voice heard. Take control of your own financial journey. Educate yourself. Don’t be afraid to ask for help, and if you don’t like the help you’re currently receiving, there’s never been a better time for a second opinion.
We boomers have made a number of fascinating contributions to modern day American life over the last 30 years. If anything, we’ve shown our resiliency – our ability to meet challenge after challenge without lying down. Perhaps it’s time for us to take on one more and reinvent the modern day American retirement as well.
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Fred Tomczyk is the president and chief executive officer of TD AMERITRADE Holding Corporation (NASDAQ: AMTD).
Watch "Tom Brokaw Reports: Boomer$!", Thursday, March 4 at 9pm ET on CNBC. The program will also air Saturday, March 6 at 7pm ET; Sunday, March 7th at 9pm ET; and Monday, March 8th at 8pm ET.