Comments on: Baby Boomers Retiring and the Stock Market

By: Patrick

Patrick — Wed, 21 Oct 2009 16:48:58 +0000

I would encourage you all to google David Walker or see some of videos of his speeches on Youtube. He “was” the comptroller of the currency for 10 years (the accountant of the USA) before he QUIT. It’s not the fact that the baby boomers will withdraw money (it is estimated $300B per year). Just to give you an idea of what $300B is, the DJIA average yearly volume over the last 5 years was $394B (that is total volume). However, that figure is not my pmain point. 50% of retirees right now live below the poverty line. When 78 million baby boomers are retired do you really think a large majority will cover their own medical care? Walker states that the govt will either have to cut spending by 60% or taxes will have to double in order to bring the future budget to equilibrium…Why would you have $ in a volatile market (number 1) let alone through qualified plans where all proceeds are taxed at ORDINARY INCOME…

By: Dave

Dave — Tue, 15 Sep 2009 13:23:02 +0000

There is a bigger issue here. I have sent emails to several web economists and have yet to receive a reply. Here’s what sparked it: A reader of a money mag asked about stocks in his 401k. He is in his 20’s. The reply was the same old same old; you have 40 years to earn a hefty 401k.
Really?
What is going to happen to the world markets in 2040/2050 when the world population is expected stablize at around 9 billion?
The capitalist economic world market we have created it to currently be is based on ever increasing sales and dividends.
(Top) shareholders are NOT going to be satisfied with stagnate steady earnings. (That would put them in the same scenario as I, a production worker, am now in. Just existing…)
I see a market collapse that makes 2008/09/10/11 look like a party.
It probably will occur sooner, 2025/2030 when they figure it out and decide it’s game over….who has the most toys?

By: Blogging Banks

Blogging Banks — Mon, 18 May 2009 14:05:46 +0000

Actually most retired investors have diversified portfolio holding anything from domestic stocks to international stocks, bonds ( and domestic fixed income as well).
Do not forget that most of them are advised not to withdraw more than 4% of their portfolio values each year.. With dividend yields close to 4%, i think that most of the withdrawals are going to come from dividends and very few on aggregate would be selling any stocks.

By: Istvan Horvath

Istvan Horvath — Mon, 11 May 2009 22:08:09 +0000

I think it is just a tiny minority of the Baby Boomers that will cause an “issue” by selling and/or withdrawing money from the market. The truth is: most of the baby boomers don’t have savings for the retirement, so the real problem will be the poverty and their lack of retirement income.
Add to this the burden they are going to put on any kind of state pension system (Social Security in US or CPP in Canada) – that’s the real concern for the future.

[shameless self-promotion: I wrote a Report about this and you can download it by going to my website]

By: Aaron

Aaron — Thu, 07 May 2009 20:40:03 +0000

Thanks for putting this up David. It helped to put the issue more in perspective. I suppose you’re right that this isn’t going to be any sort of catastrophic event. I think my focus will be on looking for specific stocks that outperform. I predict that the indices will show less than stellar gains, but they can’t affect every company. Perhaps the star performers will be in industries where the baby boomers are least invested in.

By: MoneyNing

MoneyNing — Thu, 07 May 2009 17:35:03 +0000

I think long term, stocks are a great place to be but it would be hard for it to post another huge move like that in the short term. If you are a long term investor, then why not take a break from the day to day and just let it do its thing?

If you are a trader though, you probably should look at the markets more closely and make your own judgment.

By: marci

marci — Thu, 07 May 2009 17:03:10 +0000

Just hope that the ‘frugal movement’ catches on…. if that happens, then some of those points won’t be as valid.

1. I intend to live off of the interest and dividends from the market – not withdrawing the principal (except in emergency) – so there should be no big escape from my personal stock market.

2. Being frugal, my retirement income will amount to MORE than I am making and living on now – so I will actually have MORE to spend in retirement than I do now – by a lot! Hopefully, if the frugal movement catches on, that will apply to others as well.

3. As part of diversification, I have invested in foreign stocks as well as US.

4. I think, while some businesses may see a slow down, others (more in tune with the aging population) will just boom… that’s the changing demographics and the need to keep your stock portfolio current (and even ahead of) the age of the population.

5. Some of us, in order to help out our grandkids, will be gifting money/ or stocks, to them to spend, rather than spending it ourselves in our final years (and avoiding probate taxes, etc)…. so while you might not see us spending our money lavishly, it will still be being spent, albeit by our grandkids,etc… same money tho.

This is written from a semi-retired perspective, 55, looking at 7 years til full retirement (or less). I think 7 years is enough time for most anyone to straighten out their act, become debt free, and therefore have more discretionary income to spend in retirement. The rest of the babyboomers have time to ‘get it together’ now before retirement One can hope.

By: MoneyEnergy

MoneyEnergy — Thu, 07 May 2009 16:22:10 +0000

I’ve heard this demographic argument before too, and surely some of it is valid. But you bring up some good points here. I definitely would not see it as a reason to get out of the market, and don’t plan to. If anything, it could be an op. to pick up value buys. If there is selling happening, downward pressure on stocks means better pricing for the buyers.

By: Debby

Debby — Thu, 07 May 2009 14:55:58 +0000

I think everyone wishes they just got out of the market in June of last year but we will just try to play the cards that are dealt to us I guess. It’s hard to keep being invested but I am and the last 30 or so days has been good. Now if we can only get another 30 or 40% move up in the next 30 days, we’d all be close to what we had!