Income planners need not fear that the wave of boomers getting ready to retire will create a market sell-off that will upend income plans, several financial advisors predict.
The number of retirees is on the rise. In 2006, 34 million retired Americans received Social Security benefits, compared with 17 million in 1970, according to data from the Social Security Administration. And that number is anticipated to grow between 2010 and 2030, as boomers reach retirement age, according to the SSA.
In fact, the SSA says it is anticipated that more than 40% of its own workforce will retire by 2014.
But in spite of these daunting statistics, financial advisors say there are 2 major reasons that boomers will not create a tsunami of sell-offs. They are, first, the increasingly global investment markets that influence the performance of securities and, second, the greater life spans that will necessitate creating income over longer periods of time.
Even as boomers age, they will continue to want to be diversified in their investments, and that will include maintaining investments in securities, says Matthew Gelfand, a financial advisor and president of MDG Financial Advisors, Bethesda, Md.
Other investors, he continues, are not retiring or planning to retire. And there will be younger investors both domestically and abroad who will help maintain the demand for securities, Gelfand adds.
In China, for example, 2006 census estimates cited by Wikipedia indicated that 20.8% of the population is age 14 or younger, 71.4% is between age 15 and 64, and the remainder is aged 65 or older. The average age is 32.7.
When baby boomers entered the workforce, Gelfand says, there was no discernible evidence that they changed the financial markets, and there is no discernible evidence that they will impact the markets as they leave it, he adds.