Demographic facts of life

June 19, 2006

CNN has an interesting story today on a subject I have been watching for some years. The demography of the baby boom generation as I moves through the population has had profound effects on the economy of the United States is quite inarguable. And yet someone can always be found to dismiss the iceberg as "merely frozen water, it's quite brittle, don'tchaknow, and will disolve as we approach it." By adding any number to May 6, 1946 (my guess at the "official start" to the boom), and asking yourself, "What would an n-year old be doing?" you get a pretty good feel for the zeitgeist of that year.

As the baby boom has passed through the various stages of life, it first brought us the eighteen-year-old vote and the eighteen-year-old beer. Lately, as the boom hit 40-45 it began to look toward retirement and started saving up. That brought us the stock market boom in the 90's and, after the collapse in 2000, the real estate boom of the past 5 years. One month ago, the leading edge of the boom began to pass 60 and started to retire. Now, I know this will not be instantaneous, but I agree with Professor Siegel, we are in for a very rough ride over the next 5-10 years.

The question to which I have no answer is, "What does this mean, politically?" No one wants to be told that their savings have lost 50% of their value, even if everyone else is in the same boat. No one wants to be told, "You cannot retire until you are 75." even as the average life span gets longer and longer. I foresee a great deal of turmoil as the boomers react to the bad news and I don't think the turmoil will end until the boomer resign themselves to working that extra 10 years. Given human nature, this will not be an easy job and, indeed, may prove to be an impossible job.


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