Boomer retirement - no market meltdown

Scenario: The first wave of baby boomers will turn 62 and become eligible for Social Security in 2008; they will strain our health and retirement systems; they will sell off financial assets to a smaller pool of workers, thereby depressing prices and rates of return. How likely is the last? Not very, according to a report from the Government Accountability Office (GAO). Why? Most boomers have few assets to sell, and the minority that owns a lot will need to sell little, if any. If boomers follow the pattern of current retirees, they will spend down their assets slowly. Longer life expectancy and working past traditional retirement ages will also spread out the sale of assets.

What are the "broader risks"? GAO notes the decline in traditional defined benefit pensions and Social Security's uncertain solvency. So, individuals' financial literacy will be vital for a secure retirement.

Among the sources GAO consulted for this study were the Survey of Consumer Finances (SCF), sponsored by the Federal Reserve Board (Fed), and the Health and Retirement Study (HRS), produced by the University of Michigan and sponsored by the National Institute on Aging (NIA).

BABY BOOM GENERATION: Retirement of Baby Boomers Is Unlikely to Precipitate Dramatic Decline in Market Returns, but Broader Risks Threaten Retirement Security, GAO-06-718, July 28, 2006
     Full report (pdf, 1.1MB, 70p.)
     Highlights (pdf, 84KB, 1p.)
     Abstract (html)

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• Older workers - a better future?
• Pensions as time bombs