W.I.T #50 - The Boomer's Impact on the Stock Market
Digging into the economic impact of the largest generation in the history of the world moving into retirement.
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VIDEO TRANSCRIPT
John Scherer:
How are baby boomers affecting the economy? That's what I'm thinking about.
So back when I started my career in the financial world in the 90s, there was a lot of talk about what the baby boomer generation as they got older, how that was going to affect the stock market. Right.
So back, you know, the, the middle of the baby boom was 1955 or so. Right. So those folks, the middle of the boom was 1995. They were 40 years old. Right. And at that stage you say, listen, we were looking ahead the next 2025 years, what's going to happen when those folks start, stop working, start taking money out of their investments? And who's going to be there to buy the stocks when they're selling them?
And there was a big concern. We had that conversation with almost every client back in those days. And of course, we look back now at what's gone on in the stock market last 20 or 30 years, and we know that that has not been the case so far.
And I came across something recently that talked about how the boomers are affecting the economy, though. And I wanted to bring up a little snippet of that here. There's a clip from the Wall Street Journal here in the fall and a really interesting look at this. I never thought much in the 90s. Suddenly everybody's going to sell all their stocks and all go to cash or something. John: Right? So I was a little less pessimistic than maybe others were. But take a look at this, that the number of folks over age 65 now at record highs, not surprising. But also the amount of money that those folks are spending is at record highs. What, dating back to 1972, the share of the spending in America that's done by people over 65 is at an all time high. Right. And so on the one hand, yes, concerned are the people going to be selling, but that's not the case. Right. We take a look at growth in the market, those sort of things.
And what drives our economy, what's good for the stock market is one of the factors, consumer spending. Right. When people are spending money, that's good. It drives innovation, those sorts of things. And as we talked about in the last year going into 2023, there was a wide consensus that, hey, we're going into a recession that didn't occur. Why didn't it? A lot of different reasons for sure, but I think this is certainly one of them.
I like what the title of the article, the economy's secret weapon or something like that. Right. But you think about, and it says right here in this little snippet right people that are retired over age 65 don't have to buy houses right don't have to take on a lot of debt necessarily when jobs go away it doesn't affect them as much and in general relatively healthy finances as it says in the article right so as we think about that why didn't we have a recession? Maybe certainly a factor was the boomers, how are the baby boomers affecting the economy right and this is the spending, having the money to do those things. So not at all what we thought 20 or 30 years ago or what the common theme was on that something very different than that and I thought it was really interesting. I wanted to share that.
So that's what I'm thinking about today as always interested in knowing what you're thinking about how the baby boomers are affecting the economy. If you're watching this on YouTube, drop a comment in the comment box or shoot me an email directly. And as always thanks for watching.
John Scherer CFP® is a fee-only certified financial planner based in Middleton, Wisconsin. John has over 20 years of experience advising clients on personal tax, investment, and financial planning. You can reach him by email at john@trinfin.com.