A Man, A Backhoe, And A Project

Meet Melvin, our next door neighbor. Melvin is a retired lobsterman who spent 60 years out on the open waters surrounding Stonington, arising at the crack of dawn, heading out to his boat, and baiting and retrieving hundreds of lobster traps. But even in his retirement, he’s the most industrious person I know. He’s always working on a project.

That’s Melvin on his backhoe, which features prominently in many of his projects. So far this summer, Melvin and his backhoe have moved hundreds of lobster traps that he sold, cleared out a waste area of scrub trees and weeds, hauled and split granite rocks, built a nifty stone wall, and dug up and updated a drainage system. Melvin also built a safety fence for his toddler age great-grandson. And that’s just scratching the surface.

The next project on the horizon starts today. There are some trees that have grown up in the lot next to ours that block the view of the water for Melvin and Janet, for us, and for the owner of that lot next door. One of the trees isn’t healthy, either. The old owner of the lot didn’t want to do anything about the trees, but the new owner wants them to come down, and Melvin and his backhoe are ready to do the job. He’ll be cutting down and hauling out the branches and trunks and then chopping them up. The work starts this morning.

I also noticed a mound of fill in Melvin’s driveway. I guess that’s for the next project—or maybe the one after that.

Retirement Training

There’s a secret issue lurking deep within the many layers of this coronavirus episode and the “work from home” restrictions imposed by governmental entities, like Ohio, in response to the pandemic.  It’s a delicate, explosive, almost taboo subject that isn’t really being addressed by the people who are directly affected.

The secret issue is this:  in “boomer” households where one spouse works outside the home and the other doesn’t, the forced “shelter in place” requirements are seen as a kind of trial run for the retirement period that is coming down the road in the near future.  And neither spouse really knows, for sure, how it’s going to work when the one spouse stops trotting off to work on weekdays and ends up hanging around the house with the other spouse all day.  To be sure, they hope that the retirement years will be the golden period of bike-riding and pottery-making togetherness that the commercials depict, but they wonder if the reality is going to be more difficult . . . and darker.

To put it plainly:  is constant togetherness, without the “down time” created when one spouse is off at work, going to drive the stay-at-home spouse nuts?  And is the mere presence of the working spouse during the daytime period going to noticeably interfere with the habits and routines of the spouse who is used to having the run of the home, to do whatever s/he wants, without having the still-working spouse getting in the way or following him/her around like a lost puppy or a bored child who demands attention every waking hour of the freaking day?

Of course, this stay-at-home period isn’t a true trial run for retirement, because the working spouses are supposed to be working from home and, therefore, presumably have things to do that will occupy their time and command their attention.  Still, the need for adjustment is the same.  You might call this shutdown period a kind of partial dry run.  And, in a sense, that makes the situation even more delicate — because if the presence of the working spouse is getting on the stay-at-home spouse’s last nerve even under these circumstances, what’s it going to be like when true retirement comes and there is no work to serve as a distraction?

In households across America, spouses are walking on eggshells.  And if they aren’t, perhaps they should be.

Wild Seniors And Urban Myths

The other day I was having dinner with friends.  For some reason the conversation turned to The Villages, an enormous, sprawling, planned retirement community in central Florida, between Orlando and Gainesville, where tens of thousands of seniors live and residents ride around in souped-up and tricked-out golf carts.  And one of my friends mentioned that The Villages is known for something else:  it has apparently got an unusually high rate of sexually transmitted diseases (STDs) — higher than in surrounding, non-retiree communities.

I decided to check that out, and learned two things.  First, The Villages is so big it has its own newspaper, at Villages-News.com.  And second, the newspaper views the STD story as sufficiently serious to warrant a recent news story — one that treats the tales of wild sex and rampant STDs at The Villages to be an “urban myth,” attributable to an ill-advised comment by a Villages gynecologist in 2006 and a later book and news stories about individual seniors and their sexual escapades.  The article notes that statistics indicate that there hasn’t been a surge in STD rates in The Villages, points out that in a community so massive — the article says The Villages now is home to 125,000 people, almost all of whom are 55+ and retired — some are going to want to drink and get frisky, and concludes:  “So like any town in the country, it’s going to have a certain number residents who sleep around and acquire STDs.”

Well, okay then!  I’m not sure that the Villages-News.com story fully debunks the STD story, but mostly I had this reaction as I read the story:  who would have thought there is a place in central Florida where 125,000 seniors live together and drive around in cutesy golf carts, and that 125,000 people would view that as the ideal setting for their retirement?

 

Old, And Still Working

America’s elderly are working at levels not seen in decades.  Is that a good thing, or a bad thing?

This year, the participation rate in the labor force of retirement-age workers — that is, workers aged 65 and older — has cracked the 20 percent mark.  That’s the highest participation rate in 57 years, and twice as high as the low mark participation rate in 1985.  Since 1985, the rate of participation has steadily moved upward, with a significant increase in recent years.

The Bloomberg article linked above suggests that many of these working elderly are doing so because they have no choice:  “Rickety social safety nets, inadequate retirement savings plans and sky high health-care costs are all conspiring to make the concept of leaving the workforce something to be more feared than desired.”  But the statistics indicate that at least some of the people who are working longer are doing so by choice, rather than by desperate need.   The share of all employees age 65 or older with at least an undergraduate degree is now 53 percent, up from 25 percent in 1985, and the inflation-adjusted income of those workers has increased to an average of $78,000, 63 percent higher than the $48,000 older folks brought home in 1985.  The increase in wages of the working elderly is better than the increase for workers below 65 during that same time period.

So why are people working longer than they used to?  To be sure, some may be doing so because they’ve got no choice — America’s retirement savings statistics are dismal.  But if that is the root cause for some significant percentage of the working elderly, why is that a bad thing?  If people haven’t saved, working longer in order to build up your retirement nest egg, and cut down on the number of years in which you’ll be living on that nest egg, is just the responsible thing to do.  We shouldn’t feel sorry for them, we should be applauding them for recognizing that, when it comes to retirement planning and saving, it’s better late than never.

The more interesting and deeper trend is that the economy is welcoming these older workers and rewarding them with increasing salaries.   In short, it’s not like all of these older workers are serving as friendly, red-vested greeters at Wal-Mart.  The salary statistics indicate that the job creation in the current economy is strong, and that companies are holding on to experienced older workers rather than incentivizing them to retire.  They are recognizing that older workers have value, and still have something to contribute.  If you are an older person who likes working and wants to continue to work, that’s a very encouraging trend.

 

Old, And In Debt

One of the most basic rules of retirement planning is that retirees should be debt free.  The idea, of course, is that when you are living on a fixed income, you don’t want a significant portion of that fixed income to go to paying old debt — and paying interest on that old debt.

Increasingly, however, older Americans are breaking that very basic rule.  It’s part of a growing and worrying trend of accumulating credit card debt, and delinquency, by Americans.

According to the Federal Reserve Board, at the end of 2018 Americans had amassed $870 billion in credit card debt, which is a new record.  That debt was created on more than 480 million credit cards in circulation.  Credit card debt is the fourth largest form of consumer debt, trailing mortgage, student loan, and auto debt, but is the fastest growing category of debt.

And what is especially concerning is that older Americans are holding more credit card debt than ever.   The New York Federal Reserve Bank says 18 percent of all credit card debt is held by people between 60 and 69, and an additional 12 percent is held by people over 70.  Even worse, according to the American Banker article linked above, “by age group, older Americans are seeing their credit card debt transition into the delinquency category at an increasing pace. In particular, those in their 50s have seen the most rapid change and could be considered the most vulnerable should a change occur in their employment.”

Americans already aren’t all that great at saving for their retirements.  If people are heading into the “Golden Years” saddled with lots of old credit card debt, it’s just going to make the problem worse.  When Grandma and Grandpa need to use the Social Security checks to pay off their credit cards, they’re not going to have much of a retirement — or even any retirement at all.

40 Years Of 401(k)

Last year, 401(k) employee retirement savings plans hit a venerable milestone — the 40th anniversary of their creation.  401(k) plans were born during the Carter presidency, with the passage of the Revenue Act of 1978, which established Section 401 of the Internal Revenue Code.

The language of the statute is the dense, definition-filled content that tax lawyers love, but the concept of the 401(k) is simple:  workers can salt pre-tax money away in protected funds and invest it, thereby enjoying some tax savings and having a vehicle to save for retirement.  Many employers offer 401(k) plans as a part of their benefit package and facilitate the program through payroll deductions.  According to the Investment Company Institute, in 2016 there were almost 555,000 401(k) plans in the U.S. and more than 55 million Americans were active participants.  The ICI also reports that, as of the end of the third quarter of 2018, 401(k) plans held $5.6 trillion in assets — up from $2.2 trillion in 2008 — and represented 19 percent of the total amount of U.S. retirement assets.

Some people raise questions about the 401(k) option, arguing that its availability has helped to produce the virtual disappearance of employer-funded pension plans, in which the employer totally funded the plan and, in many instance, provided the employee with a guaranteed retirement benefit.  I think that’s wishful thinking.  Even at the time the 1978 legislation was passed, many American companies were looking to cut costs, and guaranteed pension plans were disappearing into the mists of history.  Most of us have never worked for an employer that offered a true pension plan.  To be sure, 401(k) plans are based primarily on employee contributions, not employer largesse — although in many cases employers offer some kind of match to employee contributions.

Unless you’re an investment advisor who pines for the long-lost days of funded pension plans, though, you’re probably grateful that Congress was far-sighted enough to create the 401(k) option 40 years ago.  And it’s not hard to argue that 401(k) plans are, in some respects, superior to pension plans.  The 401(k) option gets the worker directly involved in her own retirement planning; employees have to elect to participate in the plan, after all, determine how their contributions will be invested, and then have their contribution withheld from their paychecks.  The 401(k) mechanism makes that as painless, relatively speaking, as withholding for federal and state taxes and Social Security contributions — because it comes out automatically, most people don’t notice it.  And then, after a few years, workers realize that they’ve actually made progress in starting to save for retirement, and for many people that realization opens the door to additional efforts to save, invest, and get ready for the retirement years.  The 401(k) option has made many Americans take personal responsibility for their own financial affairs, rather than relying on a company pension plan to do the trick.

And you can argue that 401(k)s have had a broader benefit, too.  So much automatic saving has to be invested somewhere — principally in the U.S. stock market.  In 1978 the Dow was well below 1,000; now it stands above 25,000.  No one would argue that 401(k) plans have been solely responsible for that run up, but there is no doubt that they have contributed to buy-side pressure that has helped to move the stock market averages upward, which has the incidental benefit of helping all of those 401(k) participants who’ve put their retirement savings into the market in the first place.

Happy anniversary, 401(k)!  Beneath that Tax Code jargon lurks an idea that has been helpful to millions of Americans.  I’d say we need to give credit where credit is due:  the 401(k) is one time when Congress did the job right.

“Discordant Retirement”

After you turn 60, you start getting a lot more retirement-related communications — just like you begin to notice that you’re getting a lot more spam mailings and internet ads about things like cheaper prescription drugs and various devices that help the enfeebled perform daily chores.  And it all starts, really, when you get that AARP application in the mail that is the official acknowledgement that you are old.

Most of the retirement materials you receive are just a variation on the kind of stuff you’ve probably received for years, that talk up some great investment opportunity that is so bullet-proof you’d be a fool not to put your money in, or promise to take great care of your savings and lead you to the retirement of your dreams.  For me, those kind of “cold call” communications get moused into the trashcan.  But sometimes you see something that’s actually interesting — like this piece on “discordant retirement.”

What’s “discordant retirement,” you say?  That’s the name retirement planners have given to married couples that effectively retire at different times — where the wife keeps working after the husband stops, or vice versa.  It’s a cultural phenomenon of sorts, because it’s obviously a reflection of the prevalence of two wage-earner couples, rather than the ’50s sitcom model of working husband and wife on the home front, where the husband’s eventual retirement would be the decisive, unilaterally defining retirement event.

And it’s also interesting in that it illustrates something else about the concept of working:  people react differently to it.  Some people tire of working and decide that once they’ve reached a certain financial point they just won’t take it anymore, while others find work empowering, or important to their self image, or a significant part of their social life that they just aren’t quite ready to give up.  The article notes that “retirement” isn’t always easily defined, and often a “retired” person has just decided to do something else, like work for a charitable entity.  There are many reasons to “retire” — however you define that notion — and an equal number of reasons to keep working, and everyone is going to approach the issue somewhat differently.  In a sense, the notion of discordant retirement shows just how far we’ve come, with each half of a couple making their own individual decisions about when and how they want to retire.

After reading the article I thought about couples we know and how many of them are illustrations of “discordant retirement.”  So, what are potential “discordant retirees” supposed to do?  Well, obviously, it’s something that couples need to talk about, just as any successful married couples need to talk through and reach agreement on many issues in their lives.  And discordant retirement offers opportunities, and challenges, as couples try to figure out when and how to pull the trigger on things like Social Security payments, Medicare coverage, and other consequential retirement-related decisions.

“Discordant retirement” sounds bad, like it’s a cause for bickering — and perhaps, for some couples, it is.  But it’s actually the result of people exercising their basic individual freedoms and working through their desires and needs in the context of a partnership.  The retirement planners need to come up with a better name for it.

Uncle Involved

Aunt Corinne passed along a recent news article about Uncle Mack, who has been volunteering to help out the Savannah prosecutor’s office, which is staggering under a crushing case load.  Although Uncle Mack’s legal career, pre-retirement at least, was entirely in the civil arena, he’s thrown himself into the project, studying criminal law and helping out the prosecutors wherever he can.  You can see the article here.

Uncle Mack is one of those people who has always been “involved.”  When he lived in Reston, Virginia, he was active in leadership positions with community organizations and was featured in a full-page news article.  (The article referred to Uncle Mack as a man in “triple focus,” because of his many activities, and had a three-exposure picture of him.  It was a very nice article, but the “triple-focus” description cracked me up and has always stuck with me.  Now, whenever I see UM, I try to work in a gratuitous “triple-focus” comment just for the heck of it.  Now I’ve been able to work it into this blog post, too.)

The desire to be “involved” has, if anything, seemingly intensified after Uncle Mack retired from a long and successful career as an intellectual property lawyer.  I’m not sure I’m even aware of all of his activities, but I know he’s been working on playing the sax in a jazz combo, he’s taken acting classes and acted in a few independent, locally produced films, and now he’s helping out the prosecutor’s office.  It’s impressive, and Grandma Webner would be proud.

The experts say that a key element of any successful retirement is having interests to pursue, so you stay mentally engaged and physically active.  Uncle Mack is a living demonstration of that concept.

Does Early Retirement = Early Death?

Kish and I turned 60 last year, and naturally the prospect of retirement seems a lot closer now than it was when we were in our 40s.  As we think about what to do on the retirement front, we’ve taken out books from the library and we try to read articles that look like they may have some relevant information.

Sometimes the articles can be a bit . . . alarming.  Like this one, which provides 12 reasons not to retire early and suggests that people who retire early often run out of money, are sick and depressed, lose the social network that they built up when they were working, and deprive themselves of a rewarding second career, which apparently involves happily picking flowers in a greenhouse.  The grim list of reasons is accentuated by even grimmer artwork of troubled seniors struggling with financial concerns and thinking longingly about the good old days at the office.  In case you’re interested, reason no. 12 cites statistics that indicate that people who work longer live longer and that there is a correlation between early retirement and early death, “even when lifestyle, health and demographic issues are considered.”  That final reason is illustrated with a nice picture of somebody placing a flower on a gravestone.  Yikes!

You kind of wonder who comes up with these lists.  Is the Social Security Administration, which would love to have people work longer for system solvency reasons, planting stories like this on websites?  Or maybe the Russians have pivoted from meddling with American elections and have now decided to meddle with the retirement decisions of hardworking Americans just for the heck of it.

Does early retirement = early death?  It’s hard for me to see how you could possibly control for all of the variables and determine that retirement was the ultimate cause of death for anybody.  And, these articles being what they are, there’s a little bit of inconsistency between reason no. 1, which says that Americans are living so long and life expectancies are growing so rapidly that people are likely to outlive their savings, and reason no. 12, which says that early retirement will produce a prompt visit from the Grim Reaper.

I know relatives, friends and former colleagues who decided to retire before 65, who decided to work until 70, and who wanted to keep working after 70 and enjoyed doing so.  They all seemed happy and reasonably satisfied with their ultimate decisions — and incidentally I’ve not noticed the early retirees keeling over, either.  Their experience teaches me that everyone just needs to make their own decisions based on their own circumstances, comfort levels, financial situations, desires, and dreams.  Scare stories don’t really advance the analysis.

 

The Dow Hits 20,000

Yesterday the Dow Jones Industrial Average reached a new high, passing the 20,000 level.  The NASDAQ index and the Standard & Poor’s 500 index also are at all-time highs.

It’s an interesting milestone, and one that is very pleasing to the millions of Americans who have money invested in stocks or mutual funds.  Investment in the stock market — especially through managed mutual funds — is one way the average American can put money away for retirement and (we hope) earn a decent return on our savings.  Over its history the Dow has been pretty dependable in that regard, overcoming periodic drops and crashes and showing significant long-term increases both in absolute terms and on an inflation-adjusted basis.  That’s why, if you’re taking a long-term view, financial planners will tell you that the stock market is the best place to put your money.

These days, of course, there aren’t many alternatives for the average folks.  The interest rates on CDs are a pittance, and the returns offered by municipal bonds and corporate bonds that used to be the bedrock of retirement planning aren’t very attractive, either.  Investing in stocks in “emerging markets” seems pretty risky, too.  Those are all forces that help to explain why the stock market has been on a prolonged bull market run that has seen the Dow triple in value since it hit its low point in the dark days of March 2009.

Unfortunately, some Americans who might have shared in the Dow’s run-up got out of the market right as it hit its low point.  Gallup has determined that, in 2016, only 52 percent of Americans adults have investments in the stock market, down from the all-time high of 65 percent in 2007.  Obviously, many of those people bolted when the market crashed in 2008 and 2009 and they’ve never come back — perhaps because they are too afraid of another crash, or perhaps because they were so hurt economically by the Great Recession that they simply aren’t in a position to invest.  Those who rode out the sub-prime storm, kept their heads, and kept their investments benefited.  It’s a classic example of why anyone who invests in the stock market can’t try to time the market and has to take a long-term view that follows a long-term plan.

20,000 is an artificial milestone, of course, and we’ll no doubt see downturns in the future — but the stock market remains an important way for the average people to build their retirements and plan for the future.  For those who are in the market, 20,000 is a welcome number indeed.

My Friend, The Sculptor

If you do go to the Columbus Arts Festival this weekend, be sure to stop by the Cultural Arts Center and vote for the terracotta bust created by my friend, the Talmudic Sculptor.  His piece — which he’s left untitled, but which I think should be called Wide-Eyed Woman — is number 308 in the exhibition.  The CAC is having a kind of “people’s choice” vote and, as the T.S. mentioned, any vote for his creation is one more vote than he would have gotten otherwise.  (That kind of subtle wisdom is why he’s got the “T” in his name.)

The T.S. story is a pretty cool one.  He came to sculpture later in life, after a very successful career in law was well underway.  He found that he really enjoyed it and he has especially taken to it after his retirement.  I think he’s got real talent, and finding a new passion in retirement is something everyone should aspire to achieve.

The Death/Retirement/Disability Calculation

We all have to make some hard decisions in our lives, but one of the hardest is figuring out when to stop working.

For some people, of course, there really is no choice, because they have not accumulated the savings that would give them the freedom to make a judgment.  They simply have to keep working to survive.  But if you have worked hard, and planned, and scrimped to put money away toward retirement, you ultimately will confront the issue of whether you have saved enough and can stop working, or whether, “to be on the safe side,” you should work a little bit longer and save a little bit more.

It’s a tough choice because there are no easy answers and the consequences can be profound and, in some unfortunate instances, appallingly final.  In one direction, you can retire too soon, see your nest egg take a hit in a “market correction,” and realize with a sinking feeling that you simply don’t have enough to have the kind of retirement that you hoped to have.  No one wants to be a cash-strapped retiree who becomes a burden on their kids.  But in the other direction, if you decide to keep working, you may be struck down, or left disabled by illness, and never have the opportunity to enjoy the fruits of your labors.  Add in a few more moving parts — like whether you are someone who really enjoys your job and your co-workers, or whether you have incredibly long-lived ancestors or alternatively an apparent genetic predisposition toward certain disease, or whether you have family members who could use some help, or whether you are a worrier by nature and want to try to build enough of a cushion to provide complete retirement peace of mind — and the decision becomes even harder.

It’s also a tough choice because you can’t help but be influenced by the personal stories of the people you know.  A hale and hearty former colleague who is seemingly on the cusp of retiring dies suddenly, and you remember that one of the last times you spoke to him he was laying out his plan to work just a little bit longer before hanging up his spurs, and you shake your head and feel a chill.  A new, older acquaintance explains that he had retired, went through the market downturn in 2008-09, realized with a sinking feeling that he had pulled the trigger too soon, and scrambled to go back to work and keep earning, and you shake your head and feel a chill.  And then there are friends who develop serious health problems, friends whose siblings are in serious financial distress, friends whose spouses unexpectedly need surgery.  The list of possibilities is endless, and each little personal story tugs you in one direction and then in the other.

The most uncomfortable realization of all is that there is no magic calculation, no absolute certainty, and no clearly correct answer, and the consequences are huge.

In The Blink Of An Eye

At kitchen tables all over America today, husband and wife Baby Boomers are drinking coffee and talking soberly about their retirement plans.  They’re doing so because those plans may have just changed in the blink of an eye, as the stock market has shed a big chunk of its value in the last few trading days and they have seen their nest eggs take a big hit.

The stock market analysts are talking about a market “correction.”  It doesn’t seem like the right word, does it?  A correction typically fixes an error.  It’s hard to think of a major drop in the stock market that causes hard-working Americans to lose a chunk of their carefully accumulated savings as fixing anything.

Why the sudden plunge and sell-off?  Is it China, or general skittishness, or a concern about American and global debt, or a belated realization that the economy still is weak, or just the backroom decision of some Wall Street titans to create some turmoil that might add to their profits?  The little guys will never know what spooked the markets, and whether we’re in for more of the wild ride this coming week.  We’ll just hold on tight and try not to panic and make things worse for ourselves.

In the meantime, we’ll all be drinking coffee, scratching figures on notepads, and talking about what this means for us.  We’ll tighten our belts and shake our heads and work a little longer and think about how this might change our little corner of the world.

What else can we do?

At The Whim Of Immense Forces Beyond Your Control

Trying to save for your eventual retirement these days can be a pretty wild ride.  Everything we read tells us that we simply cannot count on our chronically underfunded Social Security system to provide the principal source of our retirement funds, even though we have been contributing to it for decades.  So, you need to “save and invest” to provide an alternative, supplemental source of funds.  But where to invest?

Bonds and other debt instruments offer only a modest return these days, and no bank pays much in the way of interest on savings accounts anymore.  That leaves investing in the stock markets — where, unless you are an insider, for the most part you invest your savings on a wing and a prayer and often feel that your money is out there at the whim of immense forces beyond your control.  It’s not exactly a warm, confident sensation.

The last few weeks have brought this ever-present feeling up to gut-punch level.  The U.S. indexes have dropped like a stone, shedding a significant chunk of their value, and the end of trading day stories about the declines can only offer speculation about why — and whether more declines are in the offing.  Then this week China surprisingly decides to devalue its currency, which has roiled the markets even more and caused more declines in global stock values.

Why has China done this?  Who knows?  China’s regulation of its economy remains a black box, and it seems clear that, when it comes to China, geopolitical factors beyond simple market forces like the law of supply and demand are influencing its economic decisions.  When China’s stock market experienced some sharp declines recently, one news article mentioned that a sign of the underlying issues was that the stock market hadn’t increased, as expected, on the Chinese Premier’s birthday.  When trading on stock markets is expected to be influenced by politician birthdays, you know you’re not exactly operating in the kind of world conceived by Adam Smith and his invisible hand.

So, what should the non-insider individual investors do in the face of these massive forces whose inexplicable decisions threaten to slash the value of their nest eggs and crush their dreams of a warm retirement some day in the future?  In a world where there aren’t many good alternatives, you can only do what you always do when you find yourself on a wild ride — hold on tight, don’t panic, and hope that it ends sooner rather than later.  Who knows?  Maybe the Chinese antics will cause the global money interests to conclude that the regulated U.S. stock market, where politician birthdays don’t affect buy-sell decisions, is a good, safe place to invest, and thereby trigger a new bull market in the U.S. of A.

Student Loans And Shrinking Choices

We’ve all heard a lot lately about college students graduating with crushing amounts of student loan debt.  A recent Washington Post article brought home the grim and spiraling reality of student loan debt — and made me wonder what its long-term ramifications are for the families of those students and the economy as a whole.

The Post article compares consumer debt loads in 2005 to those in 2014.  Nine years is not a long time — less than a decade and only one presidential administration ago — but the changes are dramatic.  The percentage of 20-somethings with mortgage debt has fallen from 63.2 percent to 42.9 percent, and the percentage with student loan debt has almost tripled, from 12.9 percent to 36.8 percent.  In short, fewer are borrowing to buy a tangible asset and more are borrowing to acquire an intangible asset with uncertain value.

We don’t know how far up the age scale this exchange of mortgage debt for student loan debt extends, but the homeowners among us should consider what a shrinking pool of potential buyers means for the value of our property and our chances of selling it.  Banks won’t view young people who owe tens of thousands of dollars in student loans as good candidates for hefty mortgage loans, and young people who can’t find the high-paying job they need to make debt payments won’t want to be saddled with a house that might interfere with their freedom to move to where jobs are more plentiful.  The upshot is shrinking choices for debt-addled 20-somethings and shrinking options for the rest of us.

But the impact goes even farther.  The Post article shows that people in their 60s also have increased their student loan debt, and that more families in every income bracket are borrowing to pay for college.  The cost of a college education thus affects entire families, with credit-worthy senior citizens taking out loans to help their children and grandchildren pay for that diploma.  The acquisition of new debt by 60-somethings runs counter to the most fundamental rule of retirement financial planning, which is that people nearing retirement should pay off debt rather than taking on more.  How many older people are deferring retirement to pay off student loans — and in the process hanging on to jobs that might otherwise be available to those recent college graduates?

For too long we have viewed a college degree as a kind of holy grail that will inevitably produce a successful career and have geared national policy to make college more “affordable” by increasing the availability of student loans.  That approach has removed any incentive for colleges to hold down costs, and the result is sharply increased tuition costs funded by long-term consumer borrowing that affects entire families.  I’m as much of a fan of a college education as anyone, but isn’t it time to challenge our colleges and universities to figure out a way to provide that education at lower cost?