Predictions that the baby boomers will crash the stock market when they retire are probably exaggerated, a Congressional Budget Office analyst writes.

Marika Santoro, a CBO macroeconomic analyst, notes in a paper that the oldest boomers turned 62 in 2008 and already are eligible to collect Social Security benefits.

“Some economists warn that if the baby boom generation begins to sell off assets to finance retirement, there could be a steep decline in the demand for assets, particularly stocks,” Santoro writes. “The amount of saving by the baby boomers during their working years might already have affected asset markets.”

The boomers might have been responsible for driving up stock prices and housing prices in recent years, Santoro writes.

If boomers begin to shift toward more conservative assets, that could lead to a big change in asset demand, Santoro adds.

But “empirical evidence about the behavior of earlier groups of retirees suggests that baby boomers will not sell their accumulated assets quickly after they retire,” Santoro writes.

One reason is that retirees tend to be cautious about selling assets, and a second reason is that many retirees will prefer to pass assets on to theirs, Santoro writes.

A third reason, Santoro writes, is that U.S. wealth tends to be highly concentrated, and that the boomers who have substantial amounts of assets are so wealthy that they are unlikely to spend a significant portion of their assets to pay for consumption.

In addition, investors in developing nations with young populations could take over as buyers of U.S. financial assets, Santoro writes.

A copy of the CBO analysis is available here.