Baby Boomers May Be the New Winners
Baby Boomers have nine lives. As teenagers, they benefited from profound yet positive social change in the 60’s and 70’s. As young adults, they profited during the “Greed is Good” era of the 80’s. As adults approaching middle age, they fluffed their nest eggs during the startup boom in the 1990’s and the reduction in taxes in the early 2000’s.
Not all has been rosy for Baby Boomers. Nevertheless, of all the generations alive today the average Baby Boomer who played his or her cards right in past decades may actually have the most economic stability of them all. So while 50 to 60 year old Baby Boomers are not only the new 40, they may also be the new winners.
For example while all of our retirement accounts have been impacted by multiple market hits over the past decade, the average Boomer has been invested for a longer period of time than investors in Generations X and Y. As a result, a Baby Boomer investor may have a lower cost basis on his or her investments as well as greater diversification which may have helped temper risk and volatility.
Since Baby Boomers are starting to retire, they ideally have already positioned their portfolios into Large Growth or Value and dividend-paying stocks. If the market continues to be range-bound as we collectively attempt to determine which end is up, dividend-paying investments may help support portfolio growth while prices stay flat.
Boomers also generally began working prior to the introduction of 401K’s as the primary retirement savings vehicle for employees approximately 30 years ago, and thus may have the elusive pension plan. The jury is still out on whether states will be able to support pension payments given the state of the economy, but if local governments are smart they’ll figure out how. Regardless, a Boomer’s career is often characterized by consistent and long-term employment at one employer which may have translated to consistent 401k or IRA contributions.
Boomers also may have purchased their current home in the 1980’s or 1990’s, and may not be saddled with an underwater property.
All generations have their own troubles, but it’s no coincidence that it’s the Baby Boomers of the family whose shoulders other family members are generally leaning on in today’s economy. Money and economics are relative. So while Charlie Sheen may have declared himself as a winner recently, he may have nothing on the baddest generation of them all.
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