I’ve been thinking about those 78 million baby boomers again but this time I’ve been playing a thought game about how the world would be different if these boomers, instead of being broke and poorly prepared for retirement, had prudently saved and were now all millionaires.

Let us posit that each boomer has a retirement fund of $2 million dollars and it’s in bank savings CD’s earning 5% which means each boomer has $100,000 of interest income to spend.   We’ll assume a capital tax rate of 15% so each boomer has 85k of spending power.

The key question I have churning in my thought experiment is whether these boomers would all retire and spend the remainder of their life in a world of travel and leisure or would they continue to work?

Intuitively, I think most people would chose to retire and travel or play golf or do whatever takes each particular persons fancy.  If this hypothesis is correct then millions of people would be leaving the workforce in hordes.   In this alternate scenario, I can foresee problems with the US economy and a simple scenario where there are simply not enough workers to do the work.   In this alternate universe, banks would be well capitalized and boomers would have a large amount of money to retire on but there wouldn’t be enough workers to do the work.

Unfortunately, we don’t live in this alternate universe as baby boomers are woefully unprepared for retirement.   The average boomer 401k has about 50k or money and that simply isn’t enough.   With $14 trillion dollars of “wealth” evaporated from the world over the past few years it’s difficult to understand what’s going to happen to the silver generation.