The Wall Street Journal carried an article by Karen Damato about the analysis of demographic trends that would impact the portfolios of baby boomers. Robert D. Arnott has studied demographic trends and financial-market results for over 20 years. In light of our weak economy and the growing deficit and debt, his analysis makes sense.
“The problem in a nutshell: The ratio of retirees to active workers in the U.S. will balloon.”
Retirees who depend upon their stocks and bonds to support them in retirement will find it difficult to pay their bills. He reported that “There will be 10 new senior citizens for each new working-age citizen.” To live, the retirees will need to sell their securities over time to finance their retirement. Because of the ration of 10 to 1, “there will be fewer younger investors to buy those securities.” It is the classic law of supply and demand. High supply, small demand equals low price. Baby boomers are in trouble.