Boomers Unlikely to Unload Their Stocks
So baby boomers, heading into retirement and leery of risk, will unload their stocks — and deflate the equities market for a long time, right? Don’t bet on that. For reasons ranging from low bond yields to estate planning, they’ll likely stick with stocks, especially those paying nice dividends. Of the 314 million people who live in the United States, 76 million or nearly 25 percent were born between 1945 and 1964. This baby boom generation sent a pressure wave of demand through the economy for the past 40 years. Boomer consumption created wealth. Wealth led to increased savings. Financial innovations — notably the 401(k), individual retirement account, mutual fund, and discount retail brokerage firm — helped direct much of the nation’s savings from banks into stocks. Baby boomers are beginning to retire. Standard operating procedure for many retirees is to move savings away from growth assets (stocks) and to income assets (bonds). There are even target date mutual funds that mechanically make that shift, without regard to market conditions, to arrive at a bond heavy weighting by the specified date, usually when the investor wants to retire. But now market strategists fear retiring baby boomers will want to sell their shares en masse and become a headwind for stock valuations for many years. There are many factors that make such a sell-off unlikely to happen.
Source/More: USA TodayTags: baby boomers, financial innovations, Retirement, stocks