Tags: Vanguard | baby | boomer | stock

Vanguard Report: Baby Boomer Selling Won't Sink Stock Market

Friday, 22 Nov 2013 08:52 AM

By Dan Weil

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Some financial commentators posit that retiring baby boomers will crush the stock market, as they convert their equity holdings to bonds and cash.

But a new report from Vanguard disagrees.

Baby boomers (those born between 1946 and 1964) do play a major role in the stock market, owning 47 percent of all equity assets in 2010, according to the Federal Reserve.

Editor’s Note:
5 Phases of a ‘Retirement Heist’ Exposed (See Video)

However, that's little changed from the 45.8 percent owned by those aged 46 to 64 in 1992. At that point, boomers in their 30s and 40s held only 8.4 percent of stocks.

In addition, not all baby boomers were born at the same time, so they won't all retire at the same time either, the report says. While some baby boomers already have exited the working world, others will keep at it until the 2030s.

"That means any retirement-induced equity selloff would likely be gradual," Vanguard's report says.

"Although striking demographic changes are occurring in the United States as the sizable baby boomer generation ages and life expectancy continues to extend significantly, we find no credible evidence that these changes will negatively affect future stock returns."

As for how baby boomers should approach their finances, Scott Shellady, senior vice president of derivatives at Trean Group in Chicago, tells Fox Business Network that many boomers overestimate their investment returns.

"[Interest] rates are staying lower longer — 2.75 percent on money for 10 years? That's a very difficult return for a majority of boomers," he said.

Editor’s Note:
5 Phases of a ‘Retirement Heist’ Exposed (See Video)

Related Stories:

Retirement of Baby Boomers Is at Risk

Ex-White House Economist Tyson: Baby Boomers Showing Retirement System Fails

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