A 1995-era book for Boomers by a pre-Boomer (the author is technically a tail-end Silent, but he writes and thinks like a Boomer) who is dismayed at the Boomers' complete unpreparedness as they Boom their way towards an imaginary retirement in a system the author thinks is about to collapse.
Let's get the bottom line out of the way. This is a bad and boring book with incontinent logic.
Then why read it? You don't have to, and shouldn't. But I often review bad books as an intellectual exercise: to think about what is wrong with a book, what should and should not have been done in writing it, where the errors (of, say, conception, of structure, of logic, of rhetoric) are, and so on. And with books that make predictions, it's a glorious opportunity to practice epistemic humility to read that book after its predictions should have (but didn't) come true. Finally, you can mine even the worst books for useful insights--or in this case contra-insights, since the insights come from contemplating the author's wrongness.
I'll start with the book's incontinent logic: The author agonizes over the deficits and debt that we're amassing, the utter irresponsibility of it all, warning us solemnly and repeatedly of "the coming collapse" during which the author believes we will face a multi-decade decline in both the stock market and the housing market as the Baby Boomer generation needs to sell all its stuff to make ends meet.
Yet, somehow, barely a few chapters after this prediction, the author later "predicts" Boomers will happily stay in the workforce, "enrich" everyone around them (thanks to all their wisdom and experience) and save more money and fund their lifestyles--as if somehow older workers will have access to all the jobs they want despite this alleged multi-decade collapse. Worse, a few chapters later still, the author gives his recommendations for readers, and they include saving much more money and investing that money into 401k plans. Strange. It's almost like he wrote out these self-contradictory thoughts without any sequential memory, yet there they sit in black and white just a hundred or so pages apart.
Now, if this author, as horrified as he was by the USA's debt and deficits back in 1995, could travel forward in time and see today's debt and deficits in 2023 (or look even more downfield and see Japan's much higher debt and deficits, which is where we're likely headed), he would go back to 1995 and slap himself upside his own head. And go very long US stocks. Thus we as readers can learn that a system can appear unsustainable--and may actually be unsustainable in its current form--but can still endure far longer than doomsayers assume. A train can keep rolling a lot farther than you think it can even though you believe it's on the wrong track.
This is not to say that there will never be a reckoning for our society's monetary and fiscal irresponsibilities. It's just that this reckoning could be humiliatingly further off than you'd ever imagine. This is why it is much more valuable than it at first appears to read prediction books long after their cycle: we can see what lessons can be drawn from them, what was right, what was way off, which predictions were correct but so early as to be useless, and which were timely so as to be actionable or investable. I'm not saying that I know when this reckoning is going to happen, I have no idea. But even I can see that 1995 was a bit too early to get ready for it.
One final thought. Note that "being humble" (epistemically or otherwise) is not something that you "know" in the sense of semantic or declarative knowledge. It is not that kind of knowledge. Instead, being humble is something you do. It is procedural knowledge. It is a kata and it must be practiced.
If you're curious to read another example of reading a book outside its period to mine it for insights, take a look at my review of The Gorilla Game by Jeffrey A. Moore, a book that would have destroyed any investor who took its advice at the time it was written.
Notes:
Preface: Shelter
1) The author tells a short fictional dystopian story of what the (allegedly) coming collapsed society will look like in the year 2014: old people barely making ends meet, being forced to live in bunk beds in a senior shelter, etc.
2) xv "How can it be that after seventy-five years I feel like a stranger in this world?" A fictional old man in a senior shelter with a picture of his dead wife.
Introduction: Dumpies
3) "Humans do not get out of the way of that which they cannot see moving."
-R. Buckminster Fuller
4) The word Dumpies is the author's acronym for "destitute unprepared mature people," a renaming of yuppies.
5) "The deficit is going to be reduced and possibly eliminated. The national debt will no longer spiral upward. But this positive development is going to end retirement as we know it." If this guy could have been teleported to 2023 to see the deficits and national debt that we hold now--or worse to look down the road at Japan to see what's coming next, he would go back and slap his 1995 self, get double-leveraged the US stock market, and get a job as a Cantillon insider.
6) Mass retirement as an idiosyncrasy of American 20th century history, we'll think of it like prohibition or fallout shelters, a product of an era.
7) The so-called three-legged stool: Social Security, employer pensions, and direct savings. The author says that none of these three is sturdy.
8) Incorrectly predicting cuts in social security before the baby boomers become eligible.
9) Incorrectly predicting that baby boomers will live longer than any previous generation, by contrast the boomer generation is presiding over the first decline in American life expectancy in history, thanks to obesity, diabetes, suddenly and other iatrogenic harms brought about by an hypermedicalized culture.
10) On avoiding financial myopia
Chapter 1: 2020 Foresight
11) Social Security is not sustainable, action will be taken to bring the system into balance; Social Security and Medicare are 35% of the federal budget (this is 1995, the numbers are much worse now); defense is 24%, and interest on the debt is 14% (again, much worse today).
12) Other concerns the fertility rate dropping, the number of workers compared to the number of retirees getting more and more out of whack [of course this author never realized that we were going to "solve" this problem with mass immigration]; life expectancy going up to all-time highs, etc [note that today, however, life expectancy is "suddenly" experiencing a decline for the first time in USA history].
13) Also noteworthy that the US population in 1995 (when this book came out) was 262 million, about double what it was in 1945, 50 years earlier; now it's something around 330 or 340 million, another 80-ish million more.
14) The author commits a sort of base rate/denominator error here where he describes that there will be 100 times as many people receiving Social Security in 2045 as in 1945 while the USA's population will have barely tripled. Hardly anybody had actually aged into the system in 1945.
15) Various trivia and data about Social Security, about Medicare's advisory council as a toothless watchdog organization, the alarming report they put out in 1991 which the author calls the Pentagon Papers of Social Security; on the fictional accounting of the Social Security "trust fund" which doesn't really exist, etc.
16) [I'm not sure if this author understands that the government can print money to meet any possible obligation.]
Chapter 2: The Unkindest Cuts
17) The author expects benefits to be cut. "Actuaries agree" [He is thinking in terms of nominal cuts in dollar benefits, when he doesn't realize the actual mechanism will be done through an inflation tax, they will raise the benefits at rates much lower than inflation and print the money to meet the obligation--which will produce future inflation]
18) Surveys showing how Americans are pessimistic about what benefits they'll actually get from Social Security, they're actually more pessimistic in these surveys per the author "than is called for by the facts."
19) Note the horrible economics of a two-income family because the benefits only go to the highest earner of the two.
20) Arguing against the notion that the "gray lobby" (older voters) will extract Social Security benefits politically from other generations; the author gives examples of how benefits were cut for disabled workers as well as deductibles raised for Medicare Part B; also reductions of cost of living adjustments to the lower of CPI versus wage growth; some age groups cut off for full benefits, benefits subject to taxation for higher income recipients, etc. [note that all of these are tweaking around the edges of a complicated system but in aggregate, yes, they move the needle]
21) Various parlor guessing games here on what types of changes will be made to Social Security, changes the benefit formula, means testing, cutting early retirement benefits, etc.
22) "He who desires or attempts to reform the government of a state... must at least retain the semblance of the old forms, so that it may seem to the people that there has been no change in the institutions, even though in fact they are entirely different from the old ones." --Machiavelli
23) This chapter could have been reduced to a paragraph.
Chapter 3: The Grand Old Man of Old Age
24) About Robert J. Myers, one of the architects of Social Security and a key figure in its rescue in 1983. This is an irrelevant and unnecessary chapter that could also be reduced to a paragraph.
25) Sixty-five was chosen as an arbitrary number, per Myers: "sixty was too young and seventy was too old. So we split the difference." [Nice to see such a rigorous process for the US government's biggest program! Kind of like how our health care authorities arbitrarily decided "six feet" was the right distance for social distancing.]
26) [The author makes a completely dumb and inaccurate statement here: "When in 1982 the Social Security administration found itself a few months away from bouncing checks to beneficiaries..." Once again the author needs to understand what a fiat currency is and what incredible power comes from seignorage.]
27) Social Security as an iterative system where all sorts of things can be tinkered with and changed per Myers. "...the Normal Retirement Age is the system's demographic safety valve."
Chapter 4: Pension Tension
28) Problems with employer-sponsored pension plans and 401k-type plans; on limited inflation protection of defined benefit plans, adjustments are usually ad hoc, they may not have any inflation adjustment at all, etc. [note that pension plans can inflate their way out of their pension obligations too, just like governments, just measure the adjustments against a fake and low inflation measure like CPI!] On how the US Pension Benefit Guarantee Corporation is insolvent [another common doom and zoom statement which is true but not meaningful]; how defined benefit pension plans in some ways are also ponzi-like just like Social Security. A relic of a period of US corporate history while it was insulated from foreign competition.
29) Standard pros and cons of defined contribution plans: cheaper for the employer, easier to administer, portable; the inflation risk is shifted to the employee; nobody puts any money into them, people don't take enough risk, they don't own enough stocks, myopic loss aversion.
Chapter 5: Beyond Saving
30) On personal savings not being sufficient; nobody saves money--especially the Baby Boomers. Various tired statistics that show how little Boomers save and how low their net worth is.
Chapter 6: Quantity of Life
31) This chapter warns us about life expectancies being too long for the amount of money people have saved for retirement; also warnings on the greater economic resources people will need, especially for nursing homes and so on late in life.
32) This chapter obviously would have zero idea about the declines in life expectancy that we've started to see over the past few years. This is one of the risks of mindless extrapolation, and the latest life expectancty data sort of kills the entire thesis of this chapter.
33) Various stats and factoids about aging and the populations age life expectancy, questioning the canonical view that life expectancy will peak at 85 years because of senescent frailty, etc; postulating advances in genetic engineering treating cancer etc.
34) On having retirement income that replaces your salary, rather than the 60-80% income replacement rate assumed by financial planners. Obviously this statistic itself ignores your savings rate.
35) the "sandwich generation" as a concept; Boomers funding both children and aged parents at the same time; a lot of times thinking about this is sort of pointless because it universalizes an individual situation; people face the situation they face and they tend to muddle through, they figure it out.
36) Healthcare costs; that the Medicare age will rise per the author; on long-term care costs, tightening down of trusts and loopholes to keep family assets and get people on Medicaid; on the sticker shock people get from long-term care insurance. [The real solution for a possible long-term care problem remains: if you want to get into a good facility, you still have to have enough money to be able to afford at least few years of it out of your assets: if you can do this you can easily get admitted to the best long-term care facility because they will always prioritize people who can afford to pay list price! If you're already a Medicaid person or if you are going to have to go on Medicaid within a few months, you just have to wait in line.]
Chapter 7: How to Survive Geronticide
37) This chapter is ironically wrong on a few levels. It discussed the author's expectation that healthcare will have to be "rationed" in the future, the author believes definitively that this is going to happen. [It's interesting how a consensus belief, a belief that was consensus decades ago, turns out to be "not even wrong": if anything we're offering too much health care and it costs people life expectancy because of iatrogenic harms: the irony here is people would live longer and at a higher quality if they consumed less health care!]
38) Predictions here are all wrong: that joint replacement procedures would fall, that medical care would be rationed in any way, etc.; if anything the opposite is happening,
39) The author does make a good point here mocking the healthcare rationing crowd by asking "why not just strangle everyone at birth and save the entire gross national product?" This is a well-placed reductio ad absurdum argument right here.
40) The author is early to recognize a lot of the medical tourism even back as early as 1995. "There are going to be state-of-the-art, American-staffed mega-hospitals with campus-like grounds in cities like Tijuana, Mexicali, Nogales, Hermosillo, Juarez, Monterey, and Nuevo Laredo, serving not only the West Coast, the Southwest, and Texas by road, but points north by air. They won't be comparable to US facilities: they'll be better, because they won't have their hands tied by inappropriately dubbed 'global budgets,' which will be, ironically, not global but national."
Chapter 8: The Great Depreciation
41) This chapter offers a standard bear/doom argument from the 1980s and 1990s: because Boomers are going to sell all their stocks to pay for everything, stock and asset prices are going to all crash and we'll have a "devastating economic slump." [Again, this is a "not even wrong" type prediction: first of all, it's a first order prediction that ignores people taking action with it in mind: usually, painfully obvious demographic changes are already expressed in stock/asset prices. The other irony of this argument is that such a selloff would be great thing because then the rest of us can buy these assets at lower valuations!! It's a non-argument on every level. And gain turned out to be "not even wrong" because asset prices, stock prices, housing prices, etc., in the United States are all higher than ever, which only punishes current working people who might hope to accumulate some of their own investment capital for their future.]
42) The author hilariously claims "How long to stay out of stocks and bonds? Oh, a few decades or so ought to do it" claiming that the coast still won't be clear until 2065. [!!!] Note that the DJIA was in the 4,000 range in 1995 when this book came out. Today, in late 2023, it's... 37,000, more than nine times higher. Thanks, dude!
43) This author is making tremendous category errors on a few dimensions; first, markets tend to anticipate things like this well in advance; second, there has to be a seller for every buyer, and population growth and demographics tend not to have the kind of impact on stock markets that everybody expects; often the results are less obvious or less than what people expect (and in any case we have to be humble about very obvious first-order consequences of things like these); finally if there is a tremendous crash in stock prices, believe me I'll be in there buying with both hands, and probably I won't be alone in doing so.
44) Note also that set of assumptions when applied to home prices is equally "not even wrong": home prices have done the exact opposite of collapse despite the fact that we're now well into the 2020s when a collapse should have already started according to this author.
45) Arguments of this genre may seem plausible on a naive level, but once you think through that there's two people on the side of every trade it stops making sense.
46) One of the recommendations here is to "sell your assets before everyone else does."
47) Remember, this book was written in 1995: think about how helpful this advice would be for readers in those days. The exercise of thinking about things like this will teach you epistemic humility about all predictions all the time.
48) The housing price predictions are even more hilarious than wrong: the author expects a tremendous decline in housing prices across the decades after 1995. Decline of 37% in housing prices between 1995 and 2010; elsewhere predictions of home prices falling by more than 50%.
49) It's also rather weird to hear this author lecture readers on saving more money for their retirement and in their 401K plans, and then a couple of chapters later warn us that the stock market and the housing market are going to crash for decades to come. This is incontinent.
Chapter 9: Longevity Insurance
50) The author argues here that we need "the opportunity to continue to work into our sixties, seventies, and even later if necessary." Working as a fourth leg of the so-called three-legged retirement stool of Social Security, pensions and personal savings.
51) On "productive aging": My wife often takes note of who among her patients "age well" and stay sharp and active late in life: you have to be both lucky but also take good care of the luck you get by staying active, working, working out, engaging your mind, eating well, de-medicating yourself, etc.
52) All kinds of examples of old people who continue to work at late ages, from Mike Wallace to Jessica Tandy.
Chapter 10: Postmodern Maturity
53) The AARP now supporting graying workers, contrary to its name. This chapter is insight-free and should have been cut.
Chapter 11: Role Reversal
54) Another weak, forgettable and non-predictive chapter: the author believes that ageism in in the workplace will be a thing of the past. The big part of his argument is that strength and speed are not as necessary for the labor force as they used to be, which is technically true. [But the real liability of older workers typically is neuroplasticity (in the ability to quickly learn things). But more importantly, you have to game theory out the labor market to really think through this problem: the benefit of younger workers (from the employers' standpoint) is obedience, a lack of independence and the need for income that typically is more true for younger workers than for older, more financially independent workers. Employers want dependence and compliance in employees more than they want wisdom.]
Chapter 12: The Wisdom Economy
55) On the idea that older workers would make better knowledge workers ("wisdom workers"); that the Baby Boom generation will stay connected and relevant by remaining in the labor force; that they'll be like some kind of tribal elder.
56) There is one cute quote here on page 157: "I don't know if it's true that old dogs can't learn new tricks. But I'm sure about one thing: old dog trainers can teach young dog trainers how to train young dogs." It's cute... except once you think about it you realize it's rather harshly condescending once you think about who, exactly, are the "young dogs" referred to. Thus this quote becomes sort of a nutshell indicator of the narcissism and arrogance of the Boomer generation in the eyes of Millennials and Gen Z for example.
Chapter 13: Florida Shock
57) Various examples of older Floridians still working for various reasons, Florida as an example of an older population with lots of old people still holding down jobs. Various justifications for work: to get out of the house, to stop sitting around, etc. The author's point here is that what is happening now in 1995 will happen more and more as Boomers age. Strange and overly long tangent here about the Home Shopping Network and older workers staffing their call centers.
Chapter 14: Independent Means
58) This chapter lectures readers on how they're going to need to be self-reliant; they're supposed to develop new competencies; they'll need to develop personal entrepreneurship; they'll need to make ultra long-term investments... [despite the fact that stock market and housing prices are supposed to enter a long term collapse?]
59) Useful notions here on the difference between "specific human capital" (work knowledge that is specific to a particular firm) and "general human capital" (industry knowledge that you can take with you to another job). [The author doesn't address this but this insight goes to the hyperspecialization of labor in the modern era, and how the more hyperspecialized your knowledge is the more dependent on your employer you tend to be.]
60) The investment themes here are terrible. Invest in nursing homes because lots and lots of old people? Invest in emerging markets when inflation and the author's alleged coming collapse would wreck them even more than here? These are anti-ideas.
Chapter 15: Pressing On All the Buttons
61) The organization the author created, "Future Elders of America (FEA), does not seem to have survived very long.
62) Pressing "all the buttons" of policy ideas: the author gives a lot of suggestions here (that he thinks should "all" be done): from encouraging shared housing for elder people, to "ask your employer to make emerging markets mutual funds an option in their 401k plan" to "each of us has to face up to any negative feelings we may have toward older people and deal with them."
Chapter 16: Owl Mountain
63) "From the beginning of time, societies have called older people to continue to contribute to the life of the community. The first stirrings of a new, intergenerational aging movement, in which younger people help empower older people, while older people convey their wisdom to younger people, are being felt. It's essential that members of the baby boom generation begin now to become involved in this effort, so that by the time they're older, there will be a widespread appreciation of the importance of enabling elders to contribute--in the form of paid work, if they need it--far into later life." Also: "When the aging movement attains critical mass it will release as much cultural energy as any previous coming-together of the baby boom generation, if not more." [I give the author credit for his optimism and credulousness and hope for these things too, but if anything the exact opposite of these quotes seems to be happening: the generations behind the Boomers don't want any of their wisdom, they want them to go away.]
To Read:
R. Buckminster Fuller: Critical Path
Phillip Longman: Born to Pay
Robert N Butler, MD: Why Survive?
Charles Handy: The Age of Paradox
Charles Handy: The Age of Unreason
Peter Drucker: The Age of Discontinuity