Boomer Retirement: Headwinds for U.S. Equity Markets?

According to researchers from the Federal Reserve Bank of San Francisco, historical data indicate a strong relationship between the age distribution of the U.S. population and stock market performance. A key demographic trend is the aging of the baby boom generation. As they reach retirement age, they are likely to shift from buying stocks to selling their equity holdings to finance retirement. Statistical models suggest that this shift could be a factor holding down equity valuations over the next two decades.  On the other hand, Wharton’s Jeremy Siegel, author of Stocks for the Long Run, says that growth in developing countries should generate enough demand to absorb a baby-boomer selloff and “keep stock prices high.”

The full report is available here; some interesting analysis essentially supporting the report is here.  Further analysis is available here.