PART I
Baby Boomers and Their Retirement Plans

LIFE CAN BE DELIGHTFUL on a volcanic tropical island—until the volcano erupts again. The situation of millions of Americans today appears to resemble life on that island.

They are following the formula that says they will be able to enjoy years of comfortable retirement if they work hard, save enough while they are working, and use their savings to buy stocks. After all, that’s the American Way.

Unfortunately, they are ignoring the volcano. And it’s rumbling.

Part I of this book looks at the volcano from the standpoint of individual baby boomers and their retirement plans. As we will see, when too many people follow the same formula—that is, rely on stocks to pay for their retirement—they create problems with the formula and, in a broader sense, they create problems with the concept of retirement itself.

The discussion in Part I is on two levels. The first, of course, is the financial or technical level. The second is the conceptual level—the prevailing mindset.

People are following the formula because they have been led to believe, and they want to believe, that it is sound. Moreover, few good alternatives to the formula have been developed or made available for people to see and use.

As we will see, however, the conceptual foundations of the formula are very weak.