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With approximately 75 million baby boomers gearing up for retirement, some investors are concerned that this huge wave of retirees will cause a stock market meltdown. The team at the Vanguard Group considers this event unlikely. Here are the reasons they give for a more optimistic point of view:
  • Withdrawals will happen gradually rather than a mass exodus.
  • The riches 10% of the US are likely to sell their investments during retirement, living off of dividends generated by their portfolios. This group owns 88% of the stock owned by individuals.
  • The market has other participants besides the Boomers (other generations, foundations, international investors, etc.).
  • The normal risks of stocks outweigh the demographics (the state of the economy, the level of interest rates, the tax environment, and the outlook for corporate earnings).

What do you think? Will the retirement of the baby boomers lead to a melt down in the stock market?

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