boomers cashing out

E

ER_Hopeful

Recycles dryer sheets
Joined
Sep 23, 2007
Messages
302
Location
near L.A.
hi,

I just started reading How to Retire Early and Live Well with Less Than a Million Dollars by Gillette Edmunds. One of the things he mentioned is that when the boomers start cashing out their investments from stocks/MF (I think he said around the year 2015), we'll see a major decline in the market (or something in that nature).

What is your opinion on that? This topic might have come up before, my apology if it has.
 
Don't remember the source, but I read that just the opposite might happen: all the money being released from pensions, 401Ks etc. might drive up the price of many stocks.

Bottom line: no one has a clue.
 
I have heard the explanation that it wont make a difference...people that have been investing in stocks will not suddenly shift allocation to no stocks since they will be taking out money over years and need the growth to last for years in retirement...
 
Since boomers know it's probably inflation suicide to get rid of ALL their equities, I suspect it will NOT have the effect the doomsayers say it will. I mean, are you FIRED folks running 100% fixed income portfolios right now? Didn' t think so........:)
 
Yeah, we are talking about the "educated" ones right....the rest probably went into fixed income in Jan.:(
 
maddythebeagle said:
Yeah, we are talking about the "educated" ones right....the rest probably went into fixed income in Jan.:(
Click to expand...

My portfolio has recovered to where I am up 1.5% YTD, so I guess the bear market is history...........:eek::D
 
It has been shown than most stocks are held by wealthy people who don't need to cash in their investments all at once (or at all) to fund their retirement. And government studies have shown than the typical boomer has only about $50K saved up for retirement and I am sure not all of it is invested in equities... So I don't think it will have much of an impact at all. Some people also say that MacMansions will see their price collapse when boomers retire and downsize to smaller dwellings...
 
FIREdreamer said:
.... And government studies have shown than the typical boomer has only about $50K saved up for retirement and I am sure not all of it is invested in equities....
Click to expand...

FIREdreamer, it blows my mind to think I might be an unusual boomer, considering I've never made an impressive salary. :D
 
CuppaJoe said:
FIREdreamer, it blows my mind to think I might be an unusual boomer, considering I've never made an impressive salary. :D
Click to expand...

As for other things in life, when it comes to your salary it's not the size that matters, it's what you do with it... ;). You are an unusual boomer in that you decided to save a good chunk of your income when other people were spending theirs liberally.
 
thanks for everyone's feedback. It's nice to be able to get 2nd opinions on this forum so I don't fall in the doomsayer's realm.
 
80% of the markets are really owned by 20% of the wealthiest people,.... they aint selling to pay their rent.
 
mathjak107 said:
80% of the markets are really owned by 20% of the wealthiest people,.... they aint selling to pay their rent.
Click to expand...

Not to mention the huge percentage of the market in institutional investments...Bernstein gave a number I can't remember right now, but I'm pretty sure it was over half.
 
aworkingrachel said:
Not to mention the huge percentage of the market in institutional investments...Bernstein gave a number I can't remember right now, but I'm pretty sure it was over half.
Click to expand...
Of course most of these institutions are essentially middlemen for individuals, either through mutual funds and ETFs or through pension plans. The needs of the true beneficial owners (the individuals) will necessarily be reflected over time in the behavior of their asset managers.

Count me as one who thinks there will be a negative effect on prices of existing securities, as relatively more stock will be offered, and less demanded.

You don't buy food or pay medical bills with stock, you pay with cash.

Furthermore, price effects happen at the margin. I cannot fathom how the effect could be positive, as one poster above reported reading. I think the equity managers want our money to stay put and allow them to skim those luscious management fees. So they will say whatver they think might help toward this goal.

Ha
 
I think ha makes sense.

Going a little further, all retirees are expecting "somebody else" to do all the work to produce the goods that we plan to consume. If the retirees/workers ratio goes up, we'll have a harder time getting those goods. This is pretty clear if you look at a simple pay-go system like social security. It's pretty muddy when you look at private investments.

I don't expect any huge impact, but I count this as one reason why the average return on capital over the next 40 years could be a little less than it was over the last 40. This could impact the date I retire a little, but not my asset allocation.
 
I imagine the average person will not be able to make it through retirement without touching at least some of the capital--so if that capital is in equities, they will be sold. But maybe bought by the boomer's children....
 
I don't think boomers will rush to cash out. Some who experience health problems may be forced to liquidate...

I think the rush to cash out will be when boomers less conservative (spend-thrift) children inherit the money... Many will want to take the windfall and blow it. :eek:
 
world wealth is growing faster than the withdrawls will happen. all this new emerging market wealth will need a home too.
 
Here is another way to think of this.

You are always 100% invested - the trick is whether it is in the markets or in cash. Think of that carefully when tempted to time markets (whether its appropriate to be X% in cash).

Do you think most boomers will 'rush' to empty the market and be invested in low-return vehicles with inflation knocking on the door?

I think the rush to cash out will be when boomers less conservative (spend-thrift) children inherit the money
Click to expand...

Which will stimulate spending, and therefore economic growth, which may prop up the market?

Nobody knows :)
 
You must log in or register to reply here.

Similar threads

John Galt III
Long Wait Time to get Appointment with Dermatologist
2
Replies
36
Views
879
Texas Proud
T
2
Reducing stock exposure in Retirement, age 60+
4 5 6
Replies
144
Views
8K
Onda
O
S
Crazy how much things can change in less than 10 years
Replies
13
Views
796
Surewhitey
S
S
Reconciling micro observations with macro trends? (is the economy really doing well?)
2
Replies
26
Views
2K
Koolau
Koolau
S
Managing Withdrawals beyond writing a check
Replies
7
Views
726
steady saver
S

Latest posts

Back
Top Bottom