Dollars and Jens
Saturday, August 05, 2006
Demography's Effect on Asset Markets
There's a recent GAO report (that's a 70 page PDF) saying that the "Retirement of Baby Boomers Is Unlikely to Precipitate Dramatic Decline in Market Returns, but Broader Risks Threaten Retirement Security" (that's the title).

This is not entirely good news:
Our analysis of national survey and other data suggests that retiring boomers are not likely to sell financial assets in such a way as to cause a sharp and sudden decline in financial asset prices. A large majority of boomers have few financial assets to sell. The small minority who own most assets held by this generation will likely need to sell few assets in retirement. Also, most current retirees spend down their assets slowly, with many continuing to accumulate assets. If boomers behave the same way, a rapid and large sell off of financial assets appears unlikely. Other factors that may reduce the odds of a sharp and sudden drop in asset prices include the increase in life expectancy that will spread asset sales over a longer period and the expectation of many boomers to work past traditional retirement ages.
In other words, most baby boomers won't be liquidating savings because most of them don't have any. Actually, a lot hold equity in their homes, which isn't sufficient, but it's better than if they were broke.

I think I got wind of the report from Marketwatch.

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