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Sunday October 05, 2008 | 01:00 AM

Suddenly not only is cash king, need is displacing greed for investors, at least those who are members of the huge Baby Boom generation that is watching its retirement dreams shrivel almost daily. Unfortunately, just as they (we … I’m one) are getting scared by volatile markets, safer alternatives to stocks are paying puny returns that barely keep up with inflation. But that may be good enough, despite the incessant claim by investment firms that unless we keep most of our money in the markets we’ll exhaust our savings long before drawing our last breath.

Let’s consider that premise, because frankly I’m tired of reading sob stories about people whose measly million dollar retirement portfolio condemns them to golden years of sacrifice and woe. Here’s an alternative scenario: a 60-year-old earning the national median income of $38,000 who waits until full retirement age before taking Social Security benefits will collect about $20,000 a year. A spouse who hasn’t worked as long or earned as much can get half that much, so they start with $30,000 a year, or 79 percent of the primary earner’s salary. And the payments will increase with inflation.

These hypothetical folks have been frugal, and took advantage of their employers’ retirement plans (401(k), not pension), saving a total of $200,000. They also have $100,000 in regular savings, their kids are grown and they’ve paid off their mortgage. So even if they average only 4 percent on certificates of deposit their annual income hits $42,000, almost all of it free of income tax if they file jointly. That may not be enough to pay for a vacation home in Aspen or monthly trips to Europe, but it’s possible to live decently on $3,500 a month.

If they had that million to fall back on, I’m guessing they’d feel pretty flush. That is, unless they’ve become accustomed to a spendthrift lifestyle financed by home equity loans and credit cards, two other fee-earning schemes pushed by the incestuously intertwined financial services industry.

Like the American approach to finance in general, which in two generations has shifted emphasis from saving to spending, investment advice that once stressed capital preservation at retirement morphed into dire warnings that we may outlive our savings, apparently based on the unrealistic expectation that we’ll not only last nearly forever but that our lifestyle should grow more sumptuous after work no longer interferes with our leisure pursuits.

Is the turmoil on Wall Street an outgrowth of this changed mindset? Maybe some of it; if investors were less greedy – or fearful – they might not be attracted to exotic investments peddled by commission-hungry brokers and bankers.

“A lot of people just want too much; Wall Street’s always been like that,” said retired banker Bill Runner, who spent many years in the more plain vanilla arena of municipal bonds, those ho-hum, tax-free producers of reliable dividend checks once prized by retirees.

Rosado Auto Group owner Bill Rosado said tightening credit for car buyers was one reason he closed the Wilkes-Barre Dodge store he’d owned for about four years. Many car shoppers owed more than their present vehicles were worth, he said, making it impossible to get them financing. That’s an ironic comment for a dealership whose ads for years trumpeted deals for just about anyone, even those who were under water on their existing car.


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