I know many baby boomers whose retirement plans are absolutely screwed simply because every penny in capital gains was poured back into more specualtive investments and bigger debt.
Among these is a good friend of mine whom I could only gently gently warn about the implending disaster. He never took on a word I said and he wasn't happy either.
A very good natured person with good intentions. But when he preached to young folks (saw with my own eyes but could really intervene or dispute him - afraid of straining the friedship). He honestly believed even as recently as back in March this year that house prices would only go up and encourage anybody to hop in as price will only be higher). I know he was sinking deeper and deeper as every time I saw him, he was either seeing his solicitor or the lender (it's not a bank and I didn't bother asking).
He (his wife in fact was the one operating the investment over many years) made a ton of money but it's all reinvested. Had he called it quits in early 2010, he would have a very high networth now and a dream retirement.
Now, I am fearful for his well being.
I know he is in trouble because he is cursing the RBA no end and is hoping that we have a retail industry crash (so that the RBA can start cutting rates).
I told him retail is the biggest employer in the country and even if the RBA can cut rate and assuming it even has any impact - it won't (unemployment in that sector will alone make the inevitable recession much worse to depress house price even further).
I feel sorry for him.
However, if the next generation can draw a lesson from these near retirees, then their pain and suffering will benefit future generations.
However,they will be a terrible drag for their immediate offsprings for they will probably need to support them. And forget about the inheritance !
