How will baby boomers retiring affect the stock market?
As our elderly start pulling from retirement funds rather than contributing to them, do you think we'll see the market as a whole take a dive?
Public Comments
- I think that's what most expect - and that is why it will probably not happen. Institutions and corporations have too much at stake to let it happen. Institutions may roll out new innovative products designed to provide a stream of income based on equities; corporations may start paying higher dividends to make their stocks more attractive, and so on. The consensus in the mid-90s was that the real estate market had seen better days - the baby boomers were becoming empty nesters and downsizing, families were getting smaller, people were getting married later and postponing having children - all reasons why real estate was NOT going up. What followed was the most powerful real estate boom in decades.
- Retirees already have their money in income producing accounts. Its been gradually pulled out of equities over the years as they get closer to retirement. There wont be any exodus from the stock market. Many have retired early.
- On the contrary, most will be investing in the market to offset retirement cost. They will stick with what works and buy more blue-chip stocks that pay dividends.
- The Baby boomers will retire slowly over a greater than 20 year period. I doubt they will cause a market meltdown. See these links for a discussion.
- Read this from Money Magazine http://money.cnn.com/galleries/2007/moneymag/0710/gallery.retirement_myths.moneymag/5.html Basically they are saying stock ownership is so concentrated in the highest income brackets that there will be no need for a mass withdrawl or sell off. These folks simply aren't strapped for cash.
