Boomers’ Retirements Will Strain Portfolios

Posted On March 15, 2012

Boomers Retirement Strains Portfolios ImageAs Baby Boomers retire and turn to their portfolios to support themselves, the returns on those investments are likely to diminish, Robert Arnott of Research Affiliates, LLC tells the Wall Street Journal.  The large number of Boomers retiring at once will glut the market with the stocks and bonds they are trying to sell, reducing value. Meanwhile, the working population will have fewer resources to buy them and less interest in doing so than previous generations. The result: anemic returns.

To make matters worse, the high proportion of retired population (once Boomers retire) to working population will increase the cost of labor and, therefore, everything else. So the cost of living will go up for Boomer retirees while their resources shrink.

The solution for Boomers? According to Arnott, the best bets are saving more aggressively and investing in emerging markets, “Invest in economies that aren’t afflicted by the 3-D hurricane of deficit, debt and demography; and diversify into markets that can serve us well in a reflationary world.”

Categories: Baby Boomers, Work