Anyone who turned 70 in the past year reached a milestone with more significance than Britain’s vote to leave the European Union.
That’s according to David Rosenberg, the chief economist at Gluskin Sheff. Even President Donald Trump’s win in the US election wasn’t the most important event of 2016, in his opinion.
Rather, it was “the fact that the first of the ‘baby boomers,’ that 78 million-person ‘pig in in a python’ that has driven everything in the past six decades from the capital markets to the economy to politics, turned 70,” Rosenberg said.
In his contribution to Business Insider “most important charts in the world” feature, Rosenberg shared the graphic below which shows that the share of baby boomers over the age of 70 will continue to grow over the next 15 years.
70 is crucial because that’s when you “undertake the most profound asset mix shift since you were in your 30s and loaded up on equities,” Rosenberg said.
By that age, the focus for investing moves from capital generation to capital preservation, Rosenberg said. However, the yields on bonds that offer a safe, steady return such as Treasurys are near their lowest levels in several years. In the post-recession era, the so-called hunt for yield has pushed investors into assets where the returns and the risks are higher.
“In a world where ‘safe yield’ has become extremely scarce, the investment challenges for the ageing but not yet aged boomers are going to be daunting, to say the least,” Rosenberg said.
Other experts have already sounded the alarm on a retirement crisis that confronts even those who are far from their 70s. Americans aren’t saving enough; the share of disposable income being saved fell in December to an eight-year low of 4.5%, according to the Bureau of Economic Analysis. It was at 5.3% in April. And those who are able to save are being offered earning the lowest interest rates in recent history.
A survey by the Insured Retirement Institute found that just 23% of baby boomers thought their savings would last through retirement.
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