In the years between 2030 and 2032, a couple of interesting things are bound to happen. The National Academy of Social Insurance says that, by 2030, the ratio of Social Security beneficiaries to those who are paying into the system will rise to 45 per 100. In 2014, the ratio was 35 per 100. In 2031, the youngest Baby Boomers will turn 67 and reach what is, for now, the retirement age. According to estimates from the Office of Retirement and Disability Policy, 2032 just might be the year when Social Security’s reserves get depleted.

The Baby Boomers, those born between 1946 and 1964, are an easy target for all the voices who say they are breaking Social Security. And while Gen-Xers and Millennials might rightfully wonder what this means for them and their retirements, Baby Boomers are also worried. There’s little time for them to change their financial situation, and from how things look now, they’ll need those Social Security checks.

How Big of a Trouble Are Boomers In?

survey published by PwC found that, in 2017, the percentage of fully employed Baby Boomers who have less than $50,000 in retirement savings was 30%, down from 37% in 2016. 16% have between $50,000 and $100,000 (up from 13%), 26% have between $100,000 and $300,000, and 27% have more than $300,000 saved (up from 24%). And while that survey doesn’t paint a pretty picture, it gets even worse when those who are not full-time employees are included.

According to an online survey performed in 2016 by GOBankingRates, the percentage of those who were older than 55 and had no retirement savings was 28%. 17.3% had less than $10,000, 15.8% had between $10,000 and $100,000, 16.5% had between $100,000 and $300,000. 22.4% had over $300,000 in savings.

If we go by the most optimistic estimates, nearly half of Baby Boomers don’t have nearly enough savings to retire on, even if one thinks that the “80% of pre-retirement income” rule for retirement is overinflated. On top of that, they will have to find a way to deal with increased costs of healthcare. Because they will live longer than previous generations, they’ll have to spread their savings over a longer period of time. And even simple things like eating modest meals add up to a lot over a 20-year period.

What Caused the Baby Boomers’ Problems?

Baby Boomers are very much aware of the trouble they’re in. The Insured Retirement Institute (IRI), which has been publishing their annual Boomer Expectation for Retirement reports since 2011, found in 2017 that 60% of Baby Boomers expect their Social Security checks to be a major source of income. Only 23% believe they will have enough money to last through their whole retirement.

The same report sheds some light on some of the potential reasons why Baby Boomers might be in such dire straits. Only 40% of them have tried to calculate how much they should save for retirement. Out of those who tried, 40% didn’t factor in healthcare costs. 80% of Boomers underestimate the share of their income they’ll have to spend on healthcare.

Bad planning and management are not the only possible reason why the generation is in financial trouble. Baby Boomers were hit by the Internet bubble, the 2008 financial crisis and the recession that followed it, and they are a generation that might be stretched too thin by supporting either their children or their parents. Or both.

The Boomers’ Response

As a response to their situation, 27% of Baby Boomers plan to retire sometime after they turn 70. 21% don’t even know when they’ll retire, and only 20% plants to retire early, before they turn 65. A study by Merrill Lynch showed that many Baby Boomers would be willing to cut back on basic expenses to increase their savings. 75% would be willing to work longer – part-time, if possible. And 91% would follow in the footsteps of Presidents Clinton, Bush, and Obama – Baby Boomers and fitness-enthusiasts-in-office.

Baby Boomers can also downsize their homes to save on costs and to get the benefit of the equity. They also have access to reverse mortgages – nearly two million homeowners qualify in Texas alone for this type of mortgage that lets them use their home without the need to make any payments.

Some of the solutions to Baby Boomers’ problems might affect the younger generations. People deciding to retire later could affect the labor market in a way that will make it harder for those who are just entering it to start creating their own retirement savings due to lower wages. But if nothing else, the Baby Boomers’ predicament serves as a cautionary tale for Gen-Xers, and Millennials especially. The moral of the tale is – learn to manage your finances, save smart, and save early. And don’t forget about healthcare.

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“We will make America strong again. We will make America proud again. We will make America safe again. And we will make America great again.” – Donald Trump

Donald Trump’s campaign to be the 45th president of the United States of America was built on the core premise that he would do what it takes to “make America great again.”

To convince voters that he would indeed make America great once more, Trump made a series of promises during his long presidential campaign. Some of the more notable commitments include banning all Muslims from entering the USA, building a wall along the Mexico border, and dismantling the Dodd-Frank Act that was signed into law in 2010 following the 2008 – 2009 global financial crisis that originated from the inadequate regulation of the US financial sector.

Additionally, it is worth noting that the Trump camp did not initiate this campaign slogan. It originated with Ronald Reagan during his 1980 presidential campaign. However, Trump had an attorney register the slogan, and he requested exclusive rights to use the slogan for political purposes on 12 November 2012. It was finally registered as a service mark on 14 July 2015. The most pertinent point here is that Trump later denied that he knew about the Reagan connection to the original slogan. The reason why this fact is important is that Trump’s ever-changing rhetoric seems to be a symbol of both his campaign and, consequently his role as one of the most powerful men in the world.

The Dodd-Frank Act

What is the Dodd-Frank Act, and is undoing it an important part of improving the financial and economic conditions within the USA?

In summary, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into federal law as a response to the 2008 financial crisis by the then US President Barack Obama in 2010. In essence, it is a massive work of financial reform legislation which is intended to “decrease various risks in the U.S. financial system.” The Act allows for the establishment of a number of new government agencies to oversee the implementation of the different components of the bill and by extension the American banking system.

As part of his campaign promises, President Donald Trump pledged to repeal the Dodd-Frank Act; however, once in power, he signed an executive order on 3 February 2017 to start a review of the Dodd-Frank Act and its role in the regulation of the financial sector. He did not revoke any parts of the act.

Furthermore, this executive order contains what the Trump administration has termed “Core Principles” to govern and regulate the financial industry. Finally, the order states that the Treasury Secretary must consult with the members of the Financial Stability Oversight Council to determine whether the statutes contained within the Dodd-Frank Act support his core principles.

Financial Reform: The impact on the financial industry and the economy

By way of answering the question of whether repealing the overly punitive parts of the Dodd-Frank Act will substantially improve the financial and economic conditions in the USA, the Act’s supporters accept that parts of the law can be adjusted to simplify it as well as remove the elements which contain excessive financial regulations. However, a continuing theme throughout any discussions about the Dodd-Frank Act is the worry that by changing the stringent parts of the act, the advantage of the law will be negated.

A financial guru from Sterns Options is of the opinion that “while there is no doubt that the revoking of the punitive financial and banking regulations means that the banks will be able to grow their business and increase their transactional profits, the financial industry still needs to tread with caution to ensure that a repeat of the 2008 financial crisis does not occur.”

Additionally, Michael Barr, University of Michigan Law School professor and a principal architect of the Dodd-Frank Act is of the opinion that revoking the Dodd-Frank Act would jeopardize the interests of the American middle class, investors, and retirees. He believes that Dodd-Frank put in place practical guardrails to prevent the 2008 financial crisis from reoccurring.

Final Thoughts
Will the repealing or modification of the Dodd-Frank Act allow the American financial industry, and by extension the USA economy to grow again? In the short term, yes, I believe it will; however, what impact will it have on the global financial markets if the USA descends into another financial crisis because there is very little regulation of the financial industry?

Will the repealing or modification of the Dodd-Frank Act allow the American financial industry, and by extension the USA economy to grow again? In the short term, yes, I believe it will; however, what impact will it have on the global financial markets if the USA descends into another financial crisis because there is very little regulation of the financial industry?


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