Market May Survive Boomer Retirements
Posted On December 13, 2012
While there are many threats to the performance of equity markets, the onslaught of Baby Boomer retirements will not be one of them, according to financial analysts. While events like the “fiscal cliff” or downturns like the one in 2008 will continue to affect market performance, the fear that a mass of retiring Boomers pulling their money out of equities would crash the markets is unfounded.
While large numbers of Baby Boomers have begun to reach retirement age, their retirements should have little impact on the value of equities. For one, those retirements will be spread over 25 to 30 years, hardly a sudden, massive withdrawal. Secondly, retirees will continue to hold some positions in equities over the course of their retirement years, again softening the impact. Third, the universe of employees who may fund their future retirements though an employer-sponsored fund is expanding, bringing new investors into the market.
All in all, analysts say an orderly transition in the market is much more likely than a “Boomer retirement cliff” that would suddenly sink the value of equities.