But life had its opportunities compared to the Depression Era and World War II and we took advantage of them. We all knew real estate could only go up in value and stocks, while volatile, had been on an upsurge since 1982. The debate was always not should you own stocks, but which ones. The financial type guys were always the biggest donors and giving records to the school were broken almost every year.
Then came the tech bubble, subprime mortgages, CDOs, MBSs, Bear Stearns, Lehman Brothers, and the threatened meltdown of the world we lived in. If there was one common mistake it was we weren't diversified. Many had success building businesses and were supremely confident we were "Masters of our Financial Fate". But none could control the forces that gathered for the perfect storm.
Many of us had far too much real estate. A main house, apartment in whatever city we commuted to and the obligatory beach place or ski home were all good when the money rolled. But rarely was the question asked "can I afford it all if the music stopped?". Like mortgage- backed bonds, many discovered there was no liquidity and the comforting thought you could always sell something if times got tough turned out to as reliable as President Nixon.
The Most Important Lesson Boomers Learned
So, if we were to do it again: First, pay yourself every payday. Put some aside and make it the first "bill" you pay. Build up liquidity and make sure you have at least six months worth of cash, at least. Buy life insurance so you know the kids can go to college if the bus hits you. Keep a diversified portfolio.
Great wealth can be had by concentration—if you concentrate correctly. But try to imagine how you would feel if your huge holding was subject to a trading halt and you didn't know if the news was good or bad. If you can weather that trauma in your mind you are probably okay.
Remember, the biggest holding you will have is probably your home. Treat it like a castle and pay off the mortgage as fast as possible. Forget the folks who tell you about the tax advantages of mortgage debt. Try to have no debt.
The average savings rate for the last 70 years is about 7 percent. Be average. Save 7 percent of your take-home pay. Do not get a second mortgage to buy a boat or go on vacation. If you have to borrow, make it worthwhile and use the money to send the kids to college. Max out contributions to your 401k and your IRA. If you buy that dreamed of second home—do it with as much cash as possible.
If you are now an "unable to retire boomer" you have to lower your expectations. When the real estate market recovers, and it will, downsize and get something cheaper. Think about buying an annuity to create monthly income (I have no affiliation whatsoever with any insurance company). Take a deep breath and be glad you can still work.