Baby boomers
The most common definition of a baby boomer is a person born between 1946 and 1964, just after World War II. The youngest boomers are now in their early-to-mid 40s, while the older ones are entering their 60s. It is estimated that today's baby boomers...
The most common definition of a baby boomer is a person born between 1946 and 1964, just after World War II. The youngest boomers are now in their early-to-mid 40s, while the older ones are entering their 60s. It is estimated that today's baby boomers account for almost 30 per cent of the population, but typically hold three-quarters of a nation's financial assets.
The spending power of the aging baby boomers in the western world was the dream of any marketing manager trying to promote products and services that may not always qualify as luxuries, but that certainly were not just necessities.
Financial services companies have been the most successful in targeting the wallet of this generation that refuses to admit that it is a slowing down and aging. Soon most of them will be retiring - or will they? The real question, of course, is whether this greying brigade can really afford to retire as planned following the financial markets bloodbath that has ravished their savings.
The consequence of the asset erosions of baby boomers in the last two years will be felt in all western countries' economies for the next two decades. Trillions of dollars or euros have been wiped from the assets statements of millions of aging men and women who up to some months ago thought that they could dream of retiring in comfort with no money problems to worry about.
Even those who followed prudent financial advice and diversified their assets in a mix of equities, bonds, property and cash are finding that their portfolios have experienced falls in value ranging from forty to sixty percent. Those who were more adventurous and took a bet on riskier equities and junk bonds are even worse off.
The first consequence of this unexpected and unprecedented development is that many baby boomers have to postpone their retirement or at least giving up on their dream to tour the world on a luxury cruise liner. Some will be luckier than others in that they may have inherited some property from their parents.
The majority of baby boomers have assumed substantial commitment to help their children share in the prosperity. The children of baby boomers are usually termed as the Generation X - a generation born between 1965 and 1976. They often admire the financial achievements of their parents who admittedly lived in a world that offered more certainties and opportunities.
The Gen Xers often depend on the support of their parents to maintain the quality of life they were used to when they left home. I know of many cases of baby boomers that have helped their children make deposits on their first home. They encouraged their children to take on large loans to buy property that they would not have afforded if they depended on just their own financial resources. Now they have to help them service these loans.
One direct effect of this phenomenon is that baby boomers are likely to significantly change their spending patterns for the next two decades. No one is anticipating the stock markets to bounce back any time soon to the levels they were just two years ago. The returns on their cash and bond holdings are not making much difference on their incomes in the present low interest rate scenario.
Deflation may be the real risk now, but with the quantitative easing or printing of money being adopted by most central banks worldwide, we may soon see inflation raising its ugly head. No wonder baby boomers are suffering a bout of blues and still wondering why their retirement dreams have evaporated so quickly.
The silver lining of course is that the experience of this generation that has helped to create so much wealth in the last four decades is still invaluable. Better healthcare and the naturally optimistic disposition of most baby boomers, most of whom have started life with hardly any financial assets under their belt, will mean that this generation may continue to be protagonists in the economic life of their country.
So the world cruise on a luxury liner may have to wait for a few more years because, as they say, when the going gets tough, the tough get going. Baby boomers are no doubt a tough bunch.
johncassarwhite@yahoo.com
The spending power of the aging baby boomers in the western world was the dream of any marketing manager trying to promote products and services that may not always qualify as luxuries, but that certainly were not just necessities.
Financial services companies have been the most successful in targeting the wallet of this generation that refuses to admit that it is a slowing down and aging. Soon most of them will be retiring - or will they? The real question, of course, is whether this greying brigade can really afford to retire as planned following the financial markets bloodbath that has ravished their savings.
The consequence of the asset erosions of baby boomers in the last two years will be felt in all western countries' economies for the next two decades. Trillions of dollars or euros have been wiped from the assets statements of millions of aging men and women who up to some months ago thought that they could dream of retiring in comfort with no money problems to worry about.
Even those who followed prudent financial advice and diversified their assets in a mix of equities, bonds, property and cash are finding that their portfolios have experienced falls in value ranging from forty to sixty percent. Those who were more adventurous and took a bet on riskier equities and junk bonds are even worse off.
The first consequence of this unexpected and unprecedented development is that many baby boomers have to postpone their retirement or at least giving up on their dream to tour the world on a luxury cruise liner. Some will be luckier than others in that they may have inherited some property from their parents.
The majority of baby boomers have assumed substantial commitment to help their children share in the prosperity. The children of baby boomers are usually termed as the Generation X - a generation born between 1965 and 1976. They often admire the financial achievements of their parents who admittedly lived in a world that offered more certainties and opportunities.
The Gen Xers often depend on the support of their parents to maintain the quality of life they were used to when they left home. I know of many cases of baby boomers that have helped their children make deposits on their first home. They encouraged their children to take on large loans to buy property that they would not have afforded if they depended on just their own financial resources. Now they have to help them service these loans.
One direct effect of this phenomenon is that baby boomers are likely to significantly change their spending patterns for the next two decades. No one is anticipating the stock markets to bounce back any time soon to the levels they were just two years ago. The returns on their cash and bond holdings are not making much difference on their incomes in the present low interest rate scenario.
Deflation may be the real risk now, but with the quantitative easing or printing of money being adopted by most central banks worldwide, we may soon see inflation raising its ugly head. No wonder baby boomers are suffering a bout of blues and still wondering why their retirement dreams have evaporated so quickly.
The silver lining of course is that the experience of this generation that has helped to create so much wealth in the last four decades is still invaluable. Better healthcare and the naturally optimistic disposition of most baby boomers, most of whom have started life with hardly any financial assets under their belt, will mean that this generation may continue to be protagonists in the economic life of their country.
So the world cruise on a luxury liner may have to wait for a few more years because, as they say, when the going gets tough, the tough get going. Baby boomers are no doubt a tough bunch.
johncassarwhite@yahoo.com