Thursday, July 02, 2015 02:17pm
North Adams, MA now: 73 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
LOG IN | REGISTER NOW   

Home About Archives RSS Feed
The Independent Investor: Baby Boomers and Retirement
By Bill Schmick On: 05:28PM / Friday August 29, 2014

The nation's work force has experienced some traumatic events over the past five years. Between the financial crises, global competition and the slow pace of domestic economic growth, is it any wonder that employment in the U.S. is not what it should be? Yet the biggest challenge of all may be right around the corner as the Baby Boomers retire in droves.

From 1946 to 1964, there was a boom of baby making in this country. A total of 76 million Americans were born during those 19 years. Now those Americans are between the ages of 50 to 68 and are eyeing the prospect of retirement in the near future.

Think of it: Nearly one quarter of all Americans alive today will be leaving the labor force in the years to come. In their heyday, this demographic group shaped much of what this country is today. They lived through the greatest economic boom in our nation's history. They spent more, consumed more, bought more homes and by the late 1990s, had pushed the labor force participation rate (the share of Americans who have a job or who are looking for one) to record highs. By 2003, 82 percent of Baby Boomers were in the labor force. But times they are a changing.

Every month, more than a quarter million of us are turning 65 years old. The share of those 55 and older who are working or looking for work is beginning to fall dramatically. We didn't really notice this change until now because the financial crisis and subsequent recession put many Boomer's retirement plans on hold. Only 10 percent of Boomers had decided to retire by 2010.

Since then, however, the financial markets have come back and so has American's retirement savings accounts. Older workers are deciding to retire as portfolios increase and their confidence in the future gains ground. In the last four years, that Baby Boomer retirement figure has jumped from 10 percent to 17 percent while their labor force participation rate has just hit a 36-year low in 2014.

Over time this trend will have some profound implications for the economy. Retirees, for example, contribute less to the growth of an economy than active workers. Retirees do not produce anything. They also spend much less than they did when they were working. What's worse, the retiree community in this country has little savings. Over 31 percent of Americans have no savings at all. That means a fair amount of Baby Boomers will need to depend on others, such as government or family to support them.

All this is measured by what economists call "the dependency ratio." It is the number of people outside of working age (under 18 or over 64) per 100 adults. Adults are classified as those between ages 18 and 64. The idea is that the higher the ratio of young or old in a given population, the more difficult it is for those of working age to support these dependents.

The good news is that the dependency ratio has been improving in this country in recent decades, from 65 in 1980 to 61 in the year 2000. But the trend is beginning to reverse. By 2020, we will be back up to 65 again. And by 2030 it will be 75. But it could be worse.

Today, the U.S. has fewer residents over 65 years old than most other developed nations. By 2050, about 21 percent of our population will be 65 or older, compared to more than 30 percent in Western Europe and 40 percent in Japan. And as luck would have it, Baby Boomers are retiring at the very time their children are hitting their prime work years.

These "echo-boomers" are an even larger demographic group in size than the Baby Boomers. Many of them can't wait until we old fogies retire and open the professional work-place pipeline to their advancement. Some economists believe our reticence in embracing retirement has just led to lost opportunity for the young. In any case, more and more of us will be stepping aside in the years to come.

At the very least it will mean a sea change in how and who grows the U.S. economy for the foreseeable future.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



0 Comments
     
News Headlines
Koczela To Return As Code Enforcement Officer in Adams
Frank Field, Yard Work by Dan Earn Giorgi League Wins
'Tragic' Director Stages 'Comedy' at Shakespeare & Company
Opinion: Crossfit Offended Diabetics Everywhere
North Adams 13-year-olds Open Babe Ruth Tourney With Win
City Refutes Battalion's Claims as Team Skates into Sunset
Holiday Hours: Independence Day
Fourth of July Festivities Include Parades, Fireworks
The Classical Beat: All Systems Go At Tanglewood
North Adams Director Wins Massachusetts Emergency Manager of The Year Award

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (172)
Independent Investor (234)
Archives:
June 2015 (7)
May 2015 (6)
April 2015 (8)
March 2015 (6)
February 2015 (7)
January 2015 (9)
December 2014 (7)
November 2014 (4)
October 2014 (9)
September 2014 (5)
August 2014 (7)
July 2014 (2)
Tags:
Economy Currency Recession Europe Congress Europe Selloff Markets Interest Rates Crisis Housing Oil Deficit Federal Reserve Debt Ceiling Japan Stimulus Greece Banks Stock Market Fed Fiscal Cliff Election Stocks Rally Taxes Metals Debt Commodities Bailout Energy Euro Pullback Retirement Jobs
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
The Independent Investor: Tiny Houses Gain Appeal
@theMarket: From Russia With love
The Independent Investor: Robo-Advisers Have Landed
@theMarket: Don't Try to Trade This Market
The Independent Investor: Why Interest Rates Are Moving Higher
@theMarket: Too Hot or Too Cold
The Independent Investor: How to Run for President and Make a Fortune
The Independent Investor: Man's Most Expensive Friend
@theMarket: June Is Off the Table
The Independent Investor: Will Memorial Day Kick Off a Strong Summer?


Solid Sound Day Three
Solid Sound concluded Sunday with performances from the...
Solid Sound Day Two
Saturday's performances at Solid Sound included NRBQ,...
Solid Sound Day One
Solid Sound gates opened at 4:30 and concert goers enjoyed...
Colegrove Park School Tour
School and city officials toured the far-from-completion...
Down Street Art 2015 Kickoff
Down Street Art kicked off Thursday night with music, food,...
High School Softball All-Star...
High school softball players from throughout the county...
Bashevkin Farewell Party
Nearly 100 staff, friends, family and partners of the...
Little League Championship...
Hunter Sarkis and Logan Briggs Tuesday evening singled...
Candlelight Vigil for S.C....
More than 300 residents gathered at United Methodist Church...
Central/South Relay for Life...
Hundreds spent Friday night and Saturday morning walking...
'Amazing' Book Launch Party
Hundreds turned out for the release of Ty Allan Jackson's...
Third Thursday June 2015
Third Thursday in Pittsfield brought thousands to North...
Bruins Rally At Cheshire...
The Boston Bruins held a rally for Cheshire Elementary...
Pittsfield High Graduation...
Pittsfield High School held its graduation on Sunday at...
Taconic High Graduation 2015
Taconic High School held its graduation exercises on...
Lenox High Graduation 2015
Lenox Memorial High School presented diplomas to 64...
Solid Sound Day Three
Solid Sound concluded Sunday with performances from the...
Solid Sound Day Two
Saturday's performances at Solid Sound included NRBQ,...
Solid Sound Day One
Solid Sound gates opened at 4:30 and concert goers enjoyed...
Colegrove Park School Tour
School and city officials toured the far-from-completion...
Down Street Art 2015 Kickoff
Down Street Art kicked off Thursday night with music, food,...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings |
Advertise | Recommend This Page | Help Contact Us
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2012 Boxcar Media LLC - All rights reserved

Privacy Policy| User Agreement