The Finance Blogger

Long Term Stock Value and Baby Boomers

Biggest Financial MistakesWhat do you think the long term stock value impact of baby boomers is?  When baby boomers begin selling their stock and investments will this drive the value, the price of these investments down?  What is the demographic impact of aging baby boomers as they cash in their assets? They are paying for trips and vacations and healthcare as they get older?

There are roughly 76,000,000 baby boomers who were born between the years 1946 and 1964.  They are now nearing retirement.  As the baby boomer, we are used to facts and marketing concepts that cater to us. We are used to making changes in just about everything. We are used to getting our own way about many things.  One of those things that we have done is created a massive financial savings machine in many countries. Which baby boomers are now going to cash in on.

Long Term Stock Value impact on the stock market?

Vacation properties and locations where still birds like to spend their winters have seen a significant increase in property values.  Baby boomers are cashing in their stocks and investments to pay for vacation properties. These are they can spend their leisure time and enjoy themselves.  Locations such as Arizona Nevada and California along with Florida have seen a significant influx of baby boomers retiring.  This has driven the cost of homes, condos, etc. sky high.

Are they cashing in their investments in order to pay for these properties?  In some cases, this is probably true. However many boomers are very cautious. They know that they will need money to ensure their comfort as they get older.  They will be investing in conservative investments and avoiding high-risk venture capital type investments.  Many analysts feel that the baby boomers will cash in their investments to support their Social Security benefits. We feel the most will keep their savings for as long as they can. They want the confidence that they can weather any financial emergency.

Americans and Canadians are living longer

We’ve all heard the message, our average age is increasing. We now can look to living well into her 80s, if not into her 90s in the next 20 years.  This is causing a great deal of concern for many baby boomers. They want to make sure that their money will last them which is increasing their caution with regards to how they spend their money.

Many baby boomers will continue working simply because they have not saved enough money. Or maybe they enjoyed the social aspect of going to work every day.  Many other baby boomers will spend their time doing volunteer work and helping others who are not as fortunate.

Saving enough for retirement

The fact of the matter is that the majority of baby boomers have not saved enough money for their retirement, which will force them to continue working to live the kind of life that they prefer.  Those that have a small number of investments will likely sell those investments early on to pay for part of the retirement.  Since most of the wealth in terms of money invested in the stock market and the bond market is from the top 25% of the population, we believe that these people will be much more cautious about how they spend their money and will not cash in their investments aggressively.

While they might have to delay their retirement, they will not cash in their investments just because they want to make sure that they have enough money to last their retirement.  Based on this opinion were pretty sure that the stock market is not going to crash or fall apart as baby boomers age.  They will also pass along some of these investments to the children who will look at this money as an opportunity to pay some bills and also to satisfy their own retirement.

Stock rallies in 2012 and 2013 have clearly indicated that the stock market is still appreciating and is experiencing little impact from baby boomers selling their investments.  Bottom line is to remain diversified, focus on blue-chip stocks, with dividend income in companies that have a history of increasing dividends every year.  Generate income from these investments and live off the income without touching your principle is probably the best advice that people can fall at this point in time.

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