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…And Wiser

Recently, I had the pleasure of listening to lectures by a couple of PhDs. One who spoke, Dr. Ken Dychtwald, was on PBS, and he discussed how our social dynamics are changing due to people living longer than ever before in history.

A few hundred years ago the average life expectancy was 18 years old. The traditionally accepted retirement age of 65 was determined by Otto Von Bismarck around the turn of the last century. At that time, life expectancy was only 35. No one expected many to reach the ripe old age of 65, so there would not be many benefits to pay, but thanks to modern medicine, we are living longer. Ken said that of all the human beings in history to have reached the age of 65, fully two thirds are alive today!

Our retirement planning from years ago did not encompass the idea of life expectancy to draw near 90 years as it stands today. This past Monday, I attended a lecture at the Philadelphia Speakers Series by Dr. Robert Reich, a highly intelligent and experienced tenured professor at Brandeis and former Secretary of Labor under President Clinton. Those two met at Oxford in the Rhodes Scholar program and attended Yale Law School together.

Reich has a comfortable speaking style to approach seemingly complex issues, like the economy, and put them in very understandable terms. He postulated that there are four major methods to stimulate the economy: higher consumer spending, increased business investment, increased exports, and government spending. The first three methods have been largely depleted since the big recession began. This left only government spending, according to the old Keynesian economic model, to be available to stimulate the economy. Reich argues that while the $800 Billion stimulus appropriation of last year may have seemed like a huge sum, it wasn’t enough. The fact is, nobody knew what the right number was then and I am not sure if they know the right number now.

Reich asked for a show of hands of those in the audience born from 1946 (as he was) through 1964 as most of the audience was and we are known as the Baby Boomers. Well, we Boomers are now reaching the retirement age and many or most don’t have the means nor the desire to retire, myself included in both categories. Social Security, Reich said, after speaking to the DC economists, is not in trouble if you assume a modest 3% growth in the economy. This is the historic US growth rate from the time of the Revolutionary War. It seems that the economists threw a scare into us by theorizing that Social Security would run out but that was based on a growth assumption of just 2.6%. They just wanted to be conservative. When running the numbers at 3% we turn out well-positioned to fund SS.

Medicare on the other hand is a different story. With people living longer and medical costs rising, the funding of that program is in jeopardy. Reich noted that the monumental health care bill is an enormous undertaking when you consider that benefits will extend to 30 million of our citizens not covered before. Blend in the no pre-existing condition clause to avert personal catastrophic cost disasters, and we can imagine the strain potentially on Medicare.

Reich noted our Boomer generation could be called the Med-Med generation. While we would like to plan vacations on a regular basis at Club Med, we will still rely on Medicare. Obviously, preventative measures to reduce much costly disease conditions in the future would be an attractive choice.

The thing I have found with lectures by PhD’s is that they generally give you good information, many “a –ha” moments, and much to think about, but not solutions that would apply to each of us individually. The trouble is that there are so many variables for each family to consider giving accurate universal advice is challenging. We are supposed to take in the information, learn the rules of finance and health care (rest, exercise, good nutrition and a positive mental attitude), – you know the drill – and develop life plan programs to help ourselves. Isn’t this ‘rugged individualism’ in the traditional American Spirit? You bet, and now we have cable TV and the vast internet (thanks to VP Al Gore) to help guide us, answer questions and reduce the number of excuses to take care of ourselves.

So get up to speed. We are living longer and healthier if we are both genetically fortunate and adhere to health rules and we will have greater financial needs to support our longer lives during a period of less active earnings potential. At least wake up to reality although we may not like everything we see, we should know about the many things that can be done.

Many are starting new careers after age 65. There’s not much money in the retirement account left by Von Bismarck, but there is a plethora of educational and training opportunities to continue to support the do-it-yourself American Spirit. Avoiding problems and being attracted to a brighter future was in large part what drove mine and other’s recent ancestors to the shores of the USA. Some theorize that there was a greater incidence of ADHD among immigrants that motivated them to leave their unattractive old country surroundings and venture into a new world where they didn’t necessarily have a job line up or speak the language.

We need to ratify and fulfill the dreams of our grand and great-grandparents and take advantage of the opportunities afforded in the land of their dreams and our ever evolving democracy. People are still dying to get into this country. There are no fences keeping our citizens in. I know it is a political hot topic but as Dr. Reich confirmed, those immigrants still streaming in here are taking jobs that the previous residents do not desire. They work on the farms, in construction or in the kitchens. The work is hard but honest with pay. They dream of the better life for themselves and more so for their kids as our parents did.

And by the way, governments have been subsidizing and spending economies out of trouble for a long time. Better times will bring higher revenues so that people and businesses will be able pay more taxes and contribute to the arts and charities that have been suffering over the last two years. No matter how bad one’s situation may be, chances are good that someone else may be worse off. Consider now the unimaginably devastating earthquake that shook our Caribbean neighbors in Haiti. They are the poorest country in the hemisphere and their Capitol city was just flattened attended by the loss of at least 100,000 lives and counting. Let us pray for them and help them however we can because there but for the grace of G-d go us.

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