Baby Boomers: Bad news for an economy built on the backs of the consumer
. . . Bad news various studies are finding that real spending actually declines in retirement by as much as 1% to 2% per year. Compounded throughout retirement, this discrepancy between standard industry assumptions and actual retiree behavior may be underestimating the safe withdrawal rate.”It appears likely that at least some kind of reduced-spending-over-time assumption is more accurate than the existing baseline of constant real-dollar spending,” Mr. Tharp wrote. “The 4% rule may realistically be closer to 4.5% rule.”
Source: Demographic shift of retirees to affect consumer spending
The Baby Boomers are considered the wealthiest generation in history — and they certainly did their part transforming the American economy through their prime earning years in the 80’s and 90’s. Much has been written about the impact this generation will have in retirement — on financial services, health care, etc.
This great article by Mary Beth Franklin of Investment News points out however that even though there are billions of dollars sitting in 401(k)’s, IRA’s and Pension Funds, it might not necessarily translate to a spending spree. Afterall, when you’re 70 years old, what more do you need to buy?
