A research project from the Center for Retirement Research at Boston College, identified the potential impact of the thousands of baby boomers retiring every single day on investment returns overall. The study identified that there has never been a better reason to start saving more for retirement as the demographic transition of the growing retiree population takes hold, it can create a general drag on investment returns.
A large contingent of baby boomers in the population alongside a shrinking of other generations, the study determined that other countries beyond the United States would also experience similar growth. If the supply of savings increases in comparison to demand, declaring returns on those savings would decrease and the investors would receive less income overall from dividends, interests or profits.
However, if the saving supply decrease relative to demand, those savings can be invested in opportunities with higher returns. Retirees will be drawing down their accumulated assets over the course of retirement even while younger generations are borrowing money, paying off their debts and preparing for retirement.
The Health and Retirement Study identified that retirees tend to draw down their savings at a much slower pace than previously predicted. One of the primary concerns that many individuals have is outliving their savings or incurring serious long term care expenses. Overall, the transition may have a negative impact on investment returns, although there will be numerous factors involved in identifying the strength of that pressure.
As you look to your future, don’t forget estate planning. Contact a Valdosta estate planning lawyer as soon as possible to talk through options.