When Boomers Cash Out
If you believe all the media hype about the new world the exiting of the boomers will leave behind, you're probably terrified. The boomers will have to be taken care of by fewer younger workers. The boomers will require an increase in taxes to the young. The boomers will retire in hordes and leave industry struggle to cope. The boomers will stay in workplace longer, stealing jobs from the next generation. At this pace, the world will be different when the boomers start retiring. Or it just might be the same -- people working hard to make ends meet -- including the boomers, their children and grandchildren. But that sounds too good -- so why not another doom-and-gloom story.
According to Jeremy J. Siegel, professor of Finance at Wharton School, the world is going to suck big time when the boomers leave the work force in hordes. Today the boomers supposedly have a lot of their wealth tied up in assets -- physical and financial. When they retire, they will need cash to live on -- which means turning their parked cash into liquid funds. Big problem with that is that there are way more boomers than the next generation -- so who will they sell to? Siegel predicts that the value of their assets will plunge as they struggle to sell -- a plunge that will throw a wrench into the economies of the industrialized nations and cause massive social upheaval. Or not. The solution, Siegel suggests, is to sell to foreign interests. Bring the Chinese and Indians in, and sell everything to them. Better yet, since the boomers will then need someone to make them stuff and provide them with services to buy with all that cash they will be flooded with, outsource on massive scales -- sell and outsource entire industries.
Critics have poked a few holes in Siegel's prediction, and I won't go into them here -- for that, read the BusinessWeek article -- however, it makes me wonder, this doom-and-gloom. India and China have large untapped population, but that won't last forever. As they grow wealthy, they will most likely mimic the industrialized nations. Who will take care of their boomers? Will the industrialized nations experience another boom a generation or two from now? Is this a global cycle happening? Or, as the world shrinks, this wobbling of population will ease and reach some sort of equilibrium? Interesting to think where the next 1,000 years will lead us.
Related reading:
According to Jeremy J. Siegel, professor of Finance at Wharton School, the world is going to suck big time when the boomers leave the work force in hordes. Today the boomers supposedly have a lot of their wealth tied up in assets -- physical and financial. When they retire, they will need cash to live on -- which means turning their parked cash into liquid funds. Big problem with that is that there are way more boomers than the next generation -- so who will they sell to? Siegel predicts that the value of their assets will plunge as they struggle to sell -- a plunge that will throw a wrench into the economies of the industrialized nations and cause massive social upheaval. Or not. The solution, Siegel suggests, is to sell to foreign interests. Bring the Chinese and Indians in, and sell everything to them. Better yet, since the boomers will then need someone to make them stuff and provide them with services to buy with all that cash they will be flooded with, outsource on massive scales -- sell and outsource entire industries.
Critics have poked a few holes in Siegel's prediction, and I won't go into them here -- for that, read the BusinessWeek article -- however, it makes me wonder, this doom-and-gloom. India and China have large untapped population, but that won't last forever. As they grow wealthy, they will most likely mimic the industrialized nations. Who will take care of their boomers? Will the industrialized nations experience another boom a generation or two from now? Is this a global cycle happening? Or, as the world shrinks, this wobbling of population will ease and reach some sort of equilibrium? Interesting to think where the next 1,000 years will lead us.
Related reading:
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