Rolf Englund:
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So-called Baby Boomers are those apprx. 78 million Americans
born between 1946 and 1964, most all of whom will retire between now and 2029.
They need to sell their stocks
American baby boomers are set to transfer $30tn to their offspring in coming decades and
millennials are likely to inherit more money than they can earn or save
Financial Times
By 2050, There Could Be as Many as 25 Million Poor Elderly Americans
The Atlantic 30 December 2015
In the fall of 2013, the nation’s elderly were estimated to have owned $6.28 trillion in residential real estate and collectively owed $1.43 trillion on their mortgages. Two years later, the houses were worth 15 percent more, but the mortgage debt had only increased 2 percent.
This bodes well for those who issue reverse mortgages.
In the next decade, there will be whole swaths of the America’s elderly population that won’t even have equity to draw on and will be in serious financial trouble.
“wealth effects” doctrine did not levitate main street prosperity
Whatever savings and investments the middle class baby-boomers have left is about to get monkey-hammered good and hard.
David Stocklman, 29 December 2015
Strategy to avoid a pension catastrophe
Marginal Revolution, a very good economics blog, decided to republish a Long View from February last year
it ended with the throwaway line that Nouriel Roubini put all of his money into stocks
John Authers, FT Investment editor, March 20 2009
Bloggers have power these days. So I discovered this week when Marginal Revolution, a very good economics blog, decided to republish a Long View from February last year.
The subject was whether there was any point in trying to time the market and whether equities could be trusted for the long run – always topics that interest investors. But it caught much more attention than it had a year earlier, because it ended with the throwaway line that Nouriel Roubini put all of his money into stocks.
He did not sell all his stocks while the market was still near the top in February 2008, when my first column appeared, even though he correctly believed that equities were due to fall badly.
Why not?
We now know that February 2008 was one of those few times when a drastic move out of equities and into bonds would have paid off hugely
– bonds have gained strongly since then, while stocks have halved.
As retirement approaches, Mr Roubini made clear that leaving all your funds in stocks is not a good idea: “Even if you are only 50 per cent in equities at retirement, you could still have lost 25 per cent of your retirement wealth, and that’s huge.”
Thus, he says, we have to rethink portfolio allocation completely.
The Long View from February last year
So-called Baby Boomers are those apprx. 78 million Americans
born between 1946 and 1964, most all of whom will retire between now and 2029.
Various studies conclude that most Baby Boomers have not saved nearly enough for their retirement.
Gary D. Halbert, at John Mauldin, Aug 12 2008
Unfortunately, many Baby Boomers are hoping for another late 1990s stock market boom
to propel them to where they need to be to fund their retirement
- at the age they wish to retire and in the lifestyle they wish to afford.
So what happens if the stock markets (and the bond markets for that matter) essentially go sideways, or only deliver single digit annual returns, over the next five years or longer? I think it is safe to say that there will be a revolt.
Add in a recession, if we get one, and "revolt" could be putting it mildly!
Stocks May Disappoint When We Need Them The Most
Most baby boomers have their money in their houses
Accordingly, the only way they will be able to retire in the style they expect is to sell their houses to one another.
Examples of Stein's Law: "If something cannot go on forever, it will stop".
Dr. Woody Brock, at John Mauldin, 14/4 2008
1981-2006 - During that period, US net worth soared from $10 trillion to $57 trillion - an arithmetic average growth rate of 18% and a compound annual growth rate of 7.2%.
This will fundamentally change both American politics and daily life.
In particular, it will be the final nail in the coffin of hopes of early retirement for most baby-boomers.
Herbert Stein The Public Interest nr 97 Fall 1989
Baby boomers and the post-boomer generations are facing a retirement crisis
way beyond the worries about a collapse of Social Security
Jim Jubak March 4 2008
We don't have a whole lot of time to fix this crisis. The boomers born in 1946 will turn 65 in 2011. For many of us in the baby-boom generation, financing a relatively comfortable retirement, which never looked easy, looks increasingly impossible.
The 2007-and-counting collapse of the housing, mortgage and debt markets isn't an isolated disaster but part of a decade-long shift away from saving and investing toward speculation and gambling with our future.
The first boomers start retiring in the next few years
They need to sell their stocks
- may lead to a premature rush to the exits.
Michael Nystrom February 27, 2007
The first boomers start retiring in the next few years, and in order to maintain their standard of living, they need to sell their stocks. The problem with this is that as boomers begin to sell, without additional buyers the stock market will go down. This is bad for those who are still trying to use the market as a savings device, and may lead to a premature rush to the exits.
As Boomers Retire, a Debate: Will Stock Prices Get Crushed?
In speeches and a new book, he is warning that a flood of boomer retirees with trillions of dollars of assets to sell over the next 20 to 40 years threatens to crush stock and bond prices.
Jeremy Siegel, the Wharton School finance professor well-known until now for recommending stocks as a long-term investment.
Wall Street Journal 5/5 2005
The first of the baby boomers reach 62 in 2007.
We are looking retirement in the eye
Read more here
The day that American consumers stop spending and start saving again could bring serious problems for US growth.
The danger is obvious - at some point, faced with the approach of retirement, many baby boomers will decide they need to rebuild their savings base and pay off debt.
Gerard Baker Financial Times December14 1998