Remember the 1970s? You personally might have been discoing, but the economy had a heart attack. Two oil shortages. Inflation. Stagflation. Recession. Investments took a dive way before the fifteenth round. Luckily the rise in oil prices were artificial due to political influence, and they settled down to allow us to have two decades of growth and relative prosperity. We baby boomers have been building for our retirements during a time when the investment future always looked rosy.
Now oil prices are climbing up again and the future is returning to the past. This time oil prices are rising, blowing through the top of the derrick, and it’s not artificial. The only way oil prices will ever go down is if demand goes down. And how likely is that? A big recession could take a bite out of prices. Everyone could start driving an electric car and put solar panels on our roofs like Jimmy Carter wanted and demand would go down, but how likely his that?
We constantly hear promises that oil prices will drop to the good ole days of $50 a barrel or less, but it’s not happening. Remember inflation and how fun those times were? Our leaders claim there are no gloom and doom shortages of oil. They’ve been promising things should be stable for decades to come. Then why is oil over a hundred dollars a barrel?
Our retirement future is based on a steady but reasonable growth that nurtures our savings and investments. If inflation returns we’ll have less to live off of from our fixed incomes. As long as oil prices rise we’ll have inflation, and maybe worse.
We can effectively cut the price of oil in half by being twice as efficient or using half as much. If we had followed the policies set up in the 1970s – yes Jimmy Carter was right – we’d have pushed this current crisis ahead in time two generations. Instead we bought SUVs and drove them fast and now it’s time to pay for our speeding tickets.
I don’t know about you but I don’t like getting old, besides the growing aches and pains I don’t like uncertainties and becoming dependent. I want to stay in control. 78 million of us are in the home stretch for the Medicare finish line. As we all queue up waiting to blast off to heaven we’ll have ten, twenty, thirty and maybe even forty years of living off our fixed incomes, savings and investments. It now appears that the quality of those years could be directly related to the price of oil.
Is there anything we can do about it? Maybe. The price of gasoline has always been unnaturally low to begin with because of government subsidies. With oil production leveling off and new demand from India and China, it’s really a matter of supply and demand which might be beyond our control.
It is possible if our society quickly switches to alternative forms of energy that we’ll beat the oil crisis and maybe spur continued economic growth so our investments will grow as we age. If our leaders drag their feet like they have been doing since the 1970s when the problem was obvious, we’ll see some very bad economic times. In essence, back in the 1980s we collectively said, let’s party while we have oil and then worry.
Having a society built on irrational greed hasn’t helped. The housing market soared off the charts with unrealistic values. The Bush years of wars and occupations, Katrina and Rita, the housing loan crisis and Republicans spending like Democrats has left a big debt. In other words, there is no trend to believe we’ll suddenly start acting rationally.
So how do rational individuals plan to retire when oil prices are rising?Can we get AARP to promote energy efficient, conservation and the development of alternative forms of energy? The issue doesn’t seem to be a major topic in the presidential debates. Does buying solar panels and an electric car make economic sense during retirement years. I could retire early, next year after 30 years on the job, but I doubt it’s practical. I’m thinking I should retire and get another full time job to save money for another ten years before thinking about retirement. I’d like to retire and write those science fiction novels I’ve always wanted to write, but that won’t be practical now.
And if the cost of living is going to shoot up, where’s the best place to retire? And do I need to rethink our 401k programs? Planning for the future seems to have suddenly changed.