What is a “Baby Boomer”? That would be anyone born during the years 1946 to 1964, according to the US Census. The baby boomer generation was born after the great depression, and World War II. Many of the available figures say the baby boomer population size is 70+ million strong. This number represents a very large portion of the US total population, which is currently estimated at 305 million according to the US Census counter. This means that roughly 25% of the current US population falls within the baby boomer generation.
What does all this mean? First, this means the earliest baby boomers are just now reaching retirement age of 65 in 2011, and will continue to enter retirement until 2029. Next, right now in 2009 the youngest baby boomers are still in their mid 40’s. This means that currently a very large segment of the US population is still in the workforce. The baby boomer generation wealth is heavily invested in various ventures such as the stock market and real estate. Conventional wisdom with investing says in your younger years one should invest more in a risk portfolio such as stocks. Then as we grow older we are told to move these investments to more risk adverse holdings such as bonds, notes, and securities of this nature.
Can the incoming generation support the baby boomer retirees, and maintain a strong GDP? The short answer would be no. Not without massive policy changes or dramatic increases in tax collection. Alan Greenspan said at a conference in 2005, “that we may have already committed more physical resources to the baby-boom generation in its retirement years than our economy has the capacity to deliver." He also stated that by the time we reach 2030 it would take 2 workers to support each retiree as opposed to 3.25 for every one retiree in 2005. Greenspan also has concerns over the amount of GDP used for health care services.
With the current state of the economy there will more than likely be a short recovery over the next two years, with stronger growth occurring in the next 5-10 years, but after that we could be in for a more devastating market condition then the ones we previously faced.
I am about to paraphrase an excellent quote that I heard and have no idea as to the source. “The greatest generation made sacrifices so their children could have better lives. This current generation (baby boomers) is making sacrifices for their children so they can have better lives”.
