Baby Boomers Effect – Will The Economy Suffer?
Nowadays everything is about Millennials. However, that wasn’t the case just a few decades ago. The period after WWII was reserved for ‘baby boomers’.
At this time, the birth rate in the States increased dramatically in only two decades. Those babies are hitting their retirement age now. Actually, the first baby boomer generation reached its retirement age in 2011. For the economy, this meant removal from the labor force and impact in many different ways.
Baby Boomers Effect
Baby boomers are the longest-living generation in the history of the United States. By 2012, 11 million of baby boomers died. Future says that in 2031 the youngest boomers will be eligible to retire. Those boomers were born in 1964, and by 2031, will turn 67.
Basically, by 2029, those over 65s will make up 20% of the US population and experts in different fields, especially the economy is worried about economic effects as boomers come into old age. Overall, baby boomers have created trends that benefit particular industries.
1. Less Labor Force
As baby boomers get older certain industries can benefit from that and make their portfolio richer. Moreover, they can take boomers effect into their advantage. That being said, the majority of investments should be in the medical or medical services sector.
Pharmaceutical manufacturers, affordable care homes, medical device makers, and orthopedic manufacturers will continue to show growth as more boomers age.
Once the boomers reach 65s they will stop working, but it doesn’t mean that they will instantly be granted to get medical coverage. With so many people retiring, there will be naturally less active members of the labor force. This is a major concern for public services because they will have to rely on a smaller tax base to meet their obligations.
2. Spending Will Decrease
People spend less once they are retired. Therefore, less spending can distract to impact economic growth. It’s more important for people to save once they are retired than to spend. After all, this makes sense since they don’t have a steady income. The outcome of decreased spending: there will be much more money in banks than circulating the economy.
4. Stock Market Will Be Affected
As soon as they retire, boomers will start withdrawing from their portfolio. Simply said, they will start taking money out of the stock market. This can easily depress the price of stocks that are held in those accounts.
5. Baby Boomers Are Tech Savvy
This is the first tech-literate generation to reach retirement age. Unlike the generation before them, baby boomers tend to love technology and use it frequently. This can a good opportunity for entrepreneurs to provide high-quality tech-products for boomers who have a lot of free time.
Interestingly, boomers have shown that they are more willing to work into retirement if they are provided flexibility. Therefore, this may be a good opportunity for the labor field.
6. Social Security Funds Could Run Out
This could be a real scenario by 2035. Many are worried that the high proportion of retirement-age Americans could create problems for programs like Social Security and Medicare. This is also one of the reasons why many support higher taxes – to make up the difference.
7. Semi-Retirement Could Become A Thing
According to latesT surveys among baby boomers, they would be willing to work while in retirement. Actually, they would love to have more flexible working conditions. So, for this group of elderly, a semi-retirement could be a real option. However, the majority of employers don’t offer that option at the time. But, we could see companies in the future offering more flexible working conditions to keep their aging workforce happy and employed.
Undoubtedly, we will see the wide-ranging effects of baby boomers leaving the labor field: they will spend less and contribute less to every scale. This is not a good recipe for economic growth.
Baby boomers are also known as the generation that ‘live to work’, and they are living up to its reputation: they want to remain active in the workforce. This working longevity can cause problems for younger workers who have to find well-paid and stable work.
The Bottom Line
Baby boomers are already working longer, and it will leave enormous effects on the American economy. Therefore, we can expect to see an impact on spending: retirees will spend less and also consume less. The entire economy will be affected by this. But their retirement will have a bright side as well – they will free up jobs for people who have been struggling for years to find work.