patrick.net

freak80 says

Stocks are not cheap!

Interesting chart but not conclusive evidence of anything. It looks like stocks cratered after Nixon/Vietnam removed us from the gold standard but the early 80s created the 401(k) which diverted some large amounts into the market. Pension investment subsequently fell, but so did the savings rate.

If there's any historicity in the present, we look like we have about 10 years of relative flatline ... flatline PE, that is. E keeps going up, so I refer back to my original comment:

cc0 says

(Most graphs of any stock market are mostly meaningless; the only thing instructive about any of them is the demonstration of long-term exponential growth.)

As for this, which I don't have time to comment on fully right now:

thunderlips11 says

Again, CDs are FDIC insured and don't go to zero - but stocks do. When you're 55-65-75, safety and reliability are of more interest than saving for the future.

The stock market is a shell game. The value swings wildly based on the buyers and sellers of the moment - it doesn't reflect any deep-seated "truth" or reality. If all the boomers sell all their stocks and put the proceeds into CDs, that's fine.

Imagine this all happens at once. I know this isn't your scenario but the market free-falls or crashes. People paid $billions for their shares and got back $millions. People who don't panic stay in the market. Dividend investors see yields skyrocket. Interest rates fall because of all the money going into CDs so the yields become more attractive. Investments (ie: stocks that give you money, as opposed to stocks that give you nothing) have an implicit bottom.

So people who need income have CDs and some of the more sophisticated go into annuities. Annuities go right back into the stock market and once the knee-jerkers are out, the only people left are those who actually value their stocks so prices go right back to where they were. The CDs become new loans, which increases the money supply, driving up inflation and juicing the economy.

It ain't a pretty scenario by any means, but it's not the end of the world for people young enough to profit from it.

bob2356 says

Good luck with that. Very,very few boomers have enough retirement savings to live off the income. They will be selling stocks and bonds out of their IRA's to buy food, clothing, and pay the rent. Even the defined benefit programs will have a substantial net outflow for a long time once the wave hits. It's not possible to avoid, the big pension plans all are counting on 8%+ returns. Not going to happen.

There are SOME boomers in good shape, but you're right, the majority has little to nothing to draw upon other than their house. Some don't even have that because they've kept pulling money out of their home.

We live in interesting times. I got out, Bob.