Boomer article

[Finance Dave]

The article talks about demographics in the US and the potential impact on the equity markets over the coming generation. His comment about our parallels to Japan are quite interesting. It's hard to ignore the sheer magnitude of the demographics, but I'm sure we can find articles that support an opposing view.

Boomers' big retirement problem - 1 - investing strategy - MSN Money

 

[rescueme]

As an "early boomer" (I/DW are 64), I call "BS" on the article.

Sure, those of many decades ago could look at the "investment universe" as just the U.S. but as DW and I have observed, it is more of a "flat earth society".

Heck, our basic investments are related to "toilet paper". Do you think that with the increase in world population (and expectations of "toilet technology") that the use of TP will regress in the future?

I think not...

Of course, somebody got paid for the article ...

 

[ziggy29]

People have been incorrectly predicting the Boomer effect in the investment and labor markets for over a decade now. The Boomers are in a 15+ year age range, to expect a sudden stampede out of stocks and into retirement is unlikely in my view. Especially these days with lousy market performance over the last 12 years and fewer pensions and retiree health insurance plans out there making it harder to get out.

 

[Midpack]

People have been incorrectly predicting the Boomer effect in the investment and labor markets for over a decade now. The Boomers are in a 15+ year age range, to expect a sudden stampede out of stocks and into retirement is unlikely in my view. Especially these days with lousy market performance over the last 12 years and fewer pensions and retiree health insurance plans out there making it harder to get out.

+1. This is an oft disputed argument, even here http://www.early-retirement.org/for...nds-will-depress-portfolio-returns-60376.html. Seems to be one of many topics financial journalists trot out when they don't have anything else to write about...

 

[bld999]

The writer fails to mention that the "boomer children" population lump is close on the heels of his "bust" group. I have seen estimates of ~74 million for that group, versus 76 million for the boomers, and they need houses, investments, groceries [ and tp ]

This article appeared here someplace else, from another publication. Columnists recycling chicken-little stuff.

 

[devans0]

The boomers were a worldwide phenomena, and especially pronounced in China and Japan, where there was no echo boom. I trust that boomers will throw markets into gyrations, they always have, but I doubt that the author has his predictions correct.

I break the boomers into the early, middle and late subgroups. They act and interact very differently. I try to think of them as a family with older, middle, and younger siblings. The oldest siblings portends what will happen. (They are just hitting traditional retirement age.) Then I make my predictions. Of course my predictions are always right.

 

[ziggy29]

I break the boomers into the early, middle and late subgroups. They act and interact very differently. I try to think of them as a family with older, middle, and younger siblings. The oldest siblings portends what will happen. (They are just hitting traditional retirement age.) Then I make my predictions. Of course my predictions are always right.

Economically and culturally -- in terms of shared experiences and expectations -- I think the late Boomers have more in common with Generation X than they have with the older boomers born in the first few years after WW2.

 

[devans0]

USA will be different than Japan IMO. We have a large potential labor pool to our south. Japan is such a closed society, that they are isolated from mitigating pools of labor. Parts of China has N. Korea immigrating, but with their one-child policy, are in for a wild ride, trying to cope.

I didn't make the Gen X connection before you pointed it out. Very ++1!

 

[grasshopper]

Most Boomers can't live the next 30-40 years on dividends alone without the growth aspect of stocks. And/or Boomers don't have enough investment, and have to bump up to stocks for growth in their portfolio.

 

[traineeinvestor]

This paper has some interesting commentary on projected demographic changes in the US: http://www.fas.org/sgp/crs/misc/RL32701.pdf

Given that the working age population is still expected to grow even as the population as a whole ages, my $0.02 worth is that the US is better placed to support an ageing population than many other countries.

Also worth noting that labour participation rates have been declining for some time (not just as a result of the most recent financial crisis):

However, beyond the​

​

​

​

simple mathematics of the worsening age dependency ratio,decreasing labor force participation rates have contributed to financial imbalances within pension programs, further increasing the number of retired persons relative to those in the workforce.​

 

[arebelspy]

Also worth noting that labour participation rates have been declining for some time (not just as a result of the most recent financial crisis):

However, beyond the
simple mathematics of the worsening age dependency ratio,decreasing labor force participation rates have contributed to financial imbalances within pension programs, further increasing the number of retired persons relative to those in the workforce.

Dang those early retirees!

 

[Chuckanut]

Nothing new here. I have been reading about this for years. I imagine the stock market has already discounted it.

 

[Bikerdude]

I think many of the early boomers who were inclined to sell equities did so in 2008. As a retired boomer, I'm more concerned with income than NAV. Dividends currently beat CD's. If I wanted something to worry about it would be Medicare.

 

[ejman]

USA will be different than Japan IMO. We have a large potential labor pool to our south.

The large labor pool to the south might not be as much of a certainty as one might think. As I understand it, Mexico's demographics have changed incredibly fast to where the birth rate is now at barely replacement rate Mexico's population: When the niños run out | The Economist

 

[urn2bfree]

Apparently a lot of wealth is concentrated in older folks in the USA right now.... Last I checked no one lives forever and you can't take it with you, so the $$ has to go somewhere and some may be to buy homes to get those basement dwelling echo boomers and GenXers out of the --well I would,say hair of the Boomers but they lost that-- but some sort of boost to the struggling young generation which will be like priming the pump of the economy, starting the whole family--home-kids-car seats-minivans pattern of consumption. this Echo generation is numerically as big as the Boomers but not percentage wise of the total population. So the effect will be muted compared to the Boomers, but the economy and the markets should do ok for a while until the inevitable drag of the next set of 18-25 year olds drag it down as they do every generation. That is my guest.

 

[grasshopper]

The large labor pool to the south might not be as much of a certainty as one might think. As I understand it, Mexico's demographics have changed incredibly fast to where the birth rate is now at barely replacement rate Mexico's population: When the niños run out | The Economist

From the 2010 census, seems like [mod edit] are already here.

Detailed Hispanic Origin Distribution

About three-quarters of Hispanics in the United States reported as Mexican, Puerto Rican or Cuban origin in the 2010 Census. Mexican origin was the largest group, representing 63 percent of the total U.S. Hispanic population — up from 58 percent in 2000. This group increased by 54 percent and saw the largest numeric change (11.2 million), growing from 20.6 million in 2000 to 31.8 million in 2010. Mexicans accounted for about three-fourths of the 15.2 million increase in the total Hispanic population between 2000 and 2010

The Mexican origin population represented the largest Hispanic group in 40 states, with more than half of these states in the South and West regions of the country, along with two states in the Northeast and all 12 states in the Midwest.

Census 2010 News | 2010 Census Shows Nation's Hispanic Population Grew Four Times Faster Than Total U.S. Population

 

[MichaelB]

From the 2010 census, seems like [mod edit] are already here.

Many groups of immigrants found a home in the US and added to rapid population growth in previous generations. I wonder if they too were referred to as [mod edit]?

 

[haha]

Many groups of immigrants found a home in the US and added to rapid population growth in previous generations. I wonder if they too were referred to as [mod edit] ?

Very likely depends on who was referring to them. I know that the Irish, Italians, Jews, and various central European groups were not universally respected, to put it very mildly. What was one of the biggest complaints about the Roman catholics? They had too large families.

It should also be remembered that this was pre-welfare, and still attitudes toward the newcomers remained quite negative for a long time.

Ha

 

[eytonxav]

While I can imagine that if interest rates rise to more normal historical levels many boomers will move some portion of their equity back to CDs. However, I believe there will continue to be many new investors to offset any shift away from equities by BBers, as many third world countries are seeing prosperity and have and will continue to have new entrants into the world of investing in equities.

 

[mh]

Many groups of immigrants found a home in the US and added to rapid population growth in previous generations. I wonder if they too were referred to as [mod edit]?

The Irish were ( not using that exact term) for a while.

 

[MichaelB]

Very likely depends on who was referring to them. I know that the Irish, Italians, Jews, and various central European groups were not universally respected, to put it very mildly. What was one of the biggest complaints about the Roman catholics? They had too large families.

It should also be remembered that this was pre-welfare, and still attitudes toward the newcomers remained quite negative for a long time.

Ha

Yes, Mr. Ha, and it would appear this is changing so very slowly.

 

[Chuckanut]

Well....... Elon Musk the founder of Paypal, Tesla Motors and SpaceX is South African and has five kids. I think we are better off because of immigrants like Mr. Musk.

 

[ERD50]

Many groups of immigrants found a home in the US and added to rapid population growth in previous generations. I wonder if they too were referred to as [mod edit]?

[mod edit]

Seems factually correct:

www.census.gov/compendia/statab/2012/tables/12s0083.pdf

Table 83. Total Fertility Rate by Race and Hispanic Origin: 1980 to 2008
[Based on race of mother. Excludes births to nonresidents of United States. The total fertility rate is the number of births that 1,000
women would have in their lifetime if, at each year of age, they experienced the birth rates occurring in the specified year. A total
fertility rate of 2,110 represents “replacement level” fertility for the total population under current mortality conditions (assuming no
net immigration). See Appendix III]

Race and Hispanic origin  2008
Total 1                            2,085
White.                             2,067
Black.                             2,132
American Indian, Eskimo, Aleut.    1,844
Asian or Pacific Islander .        2,055
Hispanic 2. .                      2,912

2,912 versus a range of 1,844-2,132 across all other groups is quite an outlier.

-ERD50

 

[ejman]

Strictly from a self interest point of view (My plan is to start collecting SS at 62 at the end of this year) it seems that a growing population of hopefully working and tax paying and SS contributing young adults seems like a positive no? I mean I read about the dire forecasts of Japan and some European nations facing a dire demographic forecast of shrinking populations and dimishing working populations. That's not what we want here in the US do we? Based on ERD's post above it seems that the hispanic population is the only group at over replacement rate...

 

[Midpack]

Strictly from a self interest point of view (My plan is to start collecting SS at 62 at the end of this year) it seems that a growing population of hopefully working and tax paying and SS contributing young adults seems like a positive no? I mean I read about the dire forecasts of Japan and some European nations facing a dire demographic forecast of shrinking populations and dimishing working populations. That's not what we want here in the US do we? Based on ERD's post above it seems that the hispanic population is the only group at over replacement rate...

Agreed. Don't forget China among those facing a demographic headwind thanks to their 80's one-child policy Why Demographics Show China Poses No Long-Term Threat To The US | Emerging Markets | Minyanville.com.