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Growing Retiree Population Expected to Create Investment Return Drag

May 18, 2017

baby boomers retirement investment

A new study indicates that there’s an even better reason to try to save more for retirement. Research presented by the Center for Retirement Research at Boston College identified whether or not a growing retiree population would have an impact on investment returns. The study identified that the growing number of individuals retiring every single day and drawing down their accounts would have a potentially negative impact on the returns of investments in general.

There are shrinking numbers of subsequent generations beyond the baby boomers but the baby boomers make up a significant portion of the population. If the supply of savings increases relative to the demand for that money, the clearing on savings will decrease and investors would receive less income from dividends, interests, and profits for every dollar that they invest.

If the savings supply, however, falls relative to demand, savings can be invested in opportunities that have higher returns. As the demographic in the United States, however, shifts towards an older population mean, the economy needs less money to build new factories, machinery, offices, and roads than it did when the labor force was expanding. Although younger generations will help to increase the demand for and the supply of savings as they prepare for retirement and pay off debt and borrow, retirees will also be drawing down their own accumulated assets during the retirement process. Retirees draw down savings typically at a much slower pace than suggested by previous research. Retirees tend to hold reserves which makes it all the more important to have an experienced estate planning attorney help you determine what will happen to your assets after you pass away.

 

 

 


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Recent Posts
Do You Owe The AMT?

American educational reformer Horace Mann called education “the great equalizer.” In football, it’s been said ...

See more
What is the Value of Your Business?

In the second quarter of 2023, more than 2,300 small businesses were sold. The median ...

See more
Immediate vs. Deferred Annuities

Despite not being as well known as some other retirement tools, annuities account for 6.5% ...

See more