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Baby Boomers – Stock Warning

Baby Boomers - Stock WarningI recently saw the following headline and thought it would be a good idea to put  our own opinion out on this. We have also asked our financial advisers about this subject and expect to get two different answers  from them. So what impact do you think the impact will be that the baby boomers will have on the Stock Market and our retirement. The graph above shows this wave of boomers getting older. This will have a huge impact on the value of stocks and the transfer of money to a younger generation.

This quote was taken from a news service that I subscribe to on the CFRA Ottawa radio station, “The Federal Reserve Bank of San Francisco warns a sell-off by baby boomers may keep stock prices low for years. It says those born between 1946 and 1964 are beginning to retire, just as the stock market is starting to recover from the financial crisis. The Federal Reserve Bank says the timing is disconcerting since stock prices are closely tied to demographic trends for the past half-century.”

Baby Boomers – Stock Warning

A few Facts first

The baby boom generation consists of some 76 million people and is roughly defined as those born between 1946 and 1964. Baby boomers are nearing retirement as the oldest of this group is now 65 and the youngest 51.

All through there lives, this group has had to deal with:

  • Not enough space in the schools because the new classes were so big.
  • Getting into college was harder because there were so many applicants.
  • Not  enough pediatricians because there were so many babies.
  • The housing market took off as boomers reached the age where they got married and started buying real estate.
  • Fads that caught the attention of this massive population surge made millions for those creative enough to tap into the cultural interests of the surging mass of humanity.
  • A large percentage of people putting money in retirement funds

So what does the future hold?

Well this depends on your age your goals and frankly how much money you have. Here are some of the potential impacts:

  • Housing prices are skyrocketing in popular beach resorts and areas considered to be ideal retirement locations because of the weather, water or low taxes.
  • Baby boomers are beginning to  withdraw billions of dollars from retirement stock accounts and put their money into different investments?
  • Some boomers may not retire, preferring to work, or having to work to make up for insufficient savings

Could there be a  “market meltdown” as boomers shift their priorities? They transfer from making lots of money in their chosen careers, to withdrawing  money from their savings and living on interest income and Social Security benefits.

There are 3 things to consider:

  • Longevity – how long you will live,
  • Lower birthrates means less working people to support the boomers, and
  • The “age wave” of maturing baby boomers continuing to impact trends and fads.

People are living longer and retiring later. Most of us don’t want to sit in a rocking chair so plans are being made to travel, even working in a second career, volunteering and taking up hobbies.

No Meltdown of the Market

  • There are numerous things that can affect the market, and baby boomers are just one of them. Here is our take on it:
  • Emerging markets such as China and India will drive the markets in the future
  • Baby boomers will have less and less impact as time goes on due to emerging markets
  • Baby boomers will be cautious, living off income and not cashing in principal investments
  • Condos and vacation homes may experience a downturn in 10 years time as the boomers have less demand for these items.
  • Increasingly, North American economies will depend on people moving to this continent from other countries

We probably will not see the boom markets as in the past. But we do not see the economic downturn that some experts forecast for the markets based on the baby boomers retiring.

What is your opinion on this subject? Do you agree, disagree? Comments are welcome.

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One Response to “Baby Boomers – Stock Warning”

  1. It is one year from when this post was made and after reading it, there is no change in the conditions. Stocks are very volatile, economies are in a turmoil and not improving. have to stay with blue chip dividend paying stocks.

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