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How Boomer Retirement Will Effect the Economy Some observers fear that the typical behaviors of retirees - in particular, selling out of stock market positions and relocating to warmer climes - spell trouble for the U.S. economy. But what went before is never an advisable measuring stick when it comes to the baby boomer generation, for whom there are no guarantees. The baby boomers, some 78 million strong and full of energy as well as ideas, are often considered to have changed the face of American culture more than any other generation. Perhaps less appreciated is the effect they have had on the national economy. Now that the oldest boomers are on the verge of retirement, panic has erupted over the future of Social Security - and, albeit more quietly, over the possible effect of workforce change on investment markets. In recent years, most retirees have sold out of stock shares and attempted to generate a flow of current income with low-risk bonds and certificates of deposit. There has also been a trend of downsizing homes - the big houses in which families were raised are put on the market as retirees snap up smaller holdings in regions that are sunnier or, in some cases, closer to family. Some analysts and commentators have tended to assume these trends will continue apace as baby boomers become the retirees of tomorrow. If so, they fear, we may see a bear market accompanied by a radically uneven housing market in which some areas' boom is fed by others' problematic bust. This may be the future we ought to expect, but baby boomers have turned their entire collective existence into a kind of homage to the unpredictable and the unexpected. In other words, stock market and real estate investors would be wise to avoid premature judgments: the generation that drove the longest bull market in American history may not be ready to up stakes and assume the senior citizen mantle just yet. There are plentiful indications that baby boomers may not retire, at least in the sense of ceasing completely to work, as early as many might expect. For one thing, their average spending-to-saving ratio dwarfs that of previous generations. Perhaps boomers are simply spendthrifts (they have been widely accused of it); perhaps the cost of living has conspired against them. Whatever the case, a survey conducted not all that long ago found that 60 percent of boomer respondents felt they were behind schedule in saving for retirement. Inopportune stock market losses in the early '00s certainly did little to help. With no firsthand recollection of the 1929 crash and subsequent disarray, many baby boomers invested over-confidently during the booms of the '80s and '90s, only to be cruelly let down in '87 and '01. Under these circumstances, many now feel retirement is a distant prospect at best. Back To Mature Market News → Go To The GenerationTarget.com Mature Market Bookstore → |
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