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Minyan Mailbag: The Boomer Bomb


Who's to say boomers won't hold on to their stocks until death and pass them on in their estate to gain considerable tax benefits?


Professor Kadlec,

I want to take exception to your article on automatic enrollment. You do make some valid points and, yes, Americans need to save more. I do not take exception to positive attributes to the savings plans. But what you are missing is the agenda behind the development.

America has a serious problem approaching: The fact that 85 million baby boomers are going to be retiring over the next 30 years. Many have a good deal already in 401k's and the like. Here is the point: They will be selling in mass over this period with the accelerating beginning roughly in 2008 and continuing on a bell shaped curve over the multiple decade period.

This will have massive negative effects on our economy. Constant selling removes financial strength, plain and simple, with market caps slowly eroded.

Who steps in? The government. First, they attempted taking a piece of social security and placing it in the market. That failed. The next option is now to force people to save through "automatic enrollment". This is designed to "catch" all of the selling that will be taking place by the baby boomers. And don't think all the foreign ownership in the U.S. are not aware of the selling that will transpire. Do you think they are going to hold their positions with these facts facing them?

Unfortunately we are witnessing the maturing of a country. And now the government is attempting to step in and "save the day". This is socialism in a hidden fashion. Let us not forget how the investment banks and middlemen will benefit also.

I, for one, do not want being mandated that I have to save by my company where they offer 7 large funds owning the largest companies where there is no transparency, particularly when I am buying at the exact time a large bubble of my seniors are selling (and one foreign fund 80% in developed Europe).

I am currently pushing very hard at my company to offer a brokerage account for retirement accounts so I can stay away from the mass selling. Whether we like it or not, a hidden agenda exists for these plans. I do not believe the government is looking out for our savings. It is intervening on the mess it has made over the past 25 years and attempting to right the ship at the expense of working people.


Minyan Mike D.

Dear Minyan Mike D.,

I love a good conspiracy theory, and while there is some fundamental truth to what you say I wouldn't let it keep me from owning stocks for the rest of my life. For one thing, this aging population is going to live much longer and in much better health than you may believe. Baby boomers aren't going to sell their stocks en masse anytime soon, and with this generation's unprecedented wealth, who's to say boomers won't hold on to their stocks until death and pass them on in their estate to gain considerable tax benefits?

You must be worried about owning a home too, because who's going to buy all this real estate when boomers head to a nursing home? Yet, somehow, through wealth creation, longevity and immigration, we keep stimulating demand. Demographics aren't the only force at work. (And remember, the echo boomers-boomers' kids-are a plentiful generation too, and already are buying mutual funds and homes.) At worst, I believe the maturing population takes a percentage point or so off of annual long-term stock returns. That smarts. But it still means stocks are your best bet.


Prof. Kadlec

No positions in stocks mentioned.

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