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Supply & Demand: The Baby Boomer Generation




 By Bob Payne, Managing Director and Chief Investment Officer (CIO)

Many of our clients at Payne Capital Management are members of the Baby Boomer Generation (which I’m proud to be part of too). But when it comes to retirement planning, the Baby Boomers face some unique challenges.

Three Keys:

The Baby Boomer Generation is the largest in U.S. history

It is also living longer than any previous generation

That combination creates unique challenges when it comes to retirement planning

One of the major issues is that Baby Boomers are living longer than any previous generation, which means their retirement will last longer too. So in addition to being the largest generation in U.S. history, many Baby Boomers could be facing 30 years of retirement. The simple fact is a lot of people just haven’t saved enough money for a retirement that long. One of the reasons is the unfortunate timing of the stock market, which twice experienced major declines during the prime working, saving and investing years of the Baby Boomers.

During the dot.com bust in 2000, the S & P 500 fell almost 50 percent. Then we just had the Great Recession in 2008, where it dropped by about 57 percent. On top of that, some people panicked and pulled their money out at the bottom, either because they needed it or their fear was so great that they couldn’t stand to be invested. That’s really a problem because they just missed out on one of the strongest bull markets in history.

So you have a situation now where there are low interest rates that don’t yield enough. For prior generations, it wasn’t as much of a challenge to invest because they could put funds into a money market or CD. Those rates are zero today. One of the biggest problems is due to the sheer size of the Baby Boomer generation, we have an incredible ability to influence prices. A lot of Boomers would love to see higher bond interest rates, but there are so many of us with money who are looking to buy bonds that I think we’ll see interest rates stay low for a generation.

So it’s important to recognize that as Baby Boomers, despite the wealth we’ve created in our lives, there are challenges. The good news is those challenges can be met through the Total Master Financial Plan offered by Payne Capital Management.