Corrections or additions?
Upbeat Babyboomers: More Fuel for a Bull Market?
Affluent baby boomers are stockpiling their retirement
savings, according to a survey taken in December, and they are more
confident than ever before about their retirement futures. Not taking
into account what the stock market is doing at this moment, the net
worth of these baby boomers has grown by one-third over the past six
years. In December, more than one-third (38 percent) believed the
bull market would last more than two years, and another 30 percent
thought the market would stay healthy for at least one more year.
It’s part of an overall mood of optimism.
"People aren’t as stressed out as they were five years ago,"
says Harry O’Mealia, president and CEO of U.S. Trust Company
of New Jersey on Vaughn Drive. His company provides financial and
private banking services to affluent individuals and families —
people with profiles similar to those in the survey. The survey, the
17th in a six-year series, covers the top one percent of U.S.
with a household income of at least $230,000 and/or a net worth of
"Psychologically and financially, the boomers are better off than
they were. We are going into the millennium feeling better about
and our security," says O’Mealia.
Five years ago, less than a half of affluent boomers surveyed had
saved more than $500,000 for retirement. Today two-thirds of the
have at least $500,000, and 40 percent have at least $1 million. Baby
boomers continue to have confidence in the stock market. Ninety
have left all or most of their gains in the market, and they expect
the market to return about 12 percent over the next five to 10 years.
"People feel they have been blessed by a good economy and have
been getting their own houses in order, at least the people in the
survey," he says. The biggest financial worry: three fourths fret
that their children will have a difficult time financially. But
about such topics as inflation, rising taxes, saving enough money
for retirement, losing a job, or going out of business — these
worries have decreased about 20 percent over five years.
"Despite their confidence in the stock market, affluent baby
have been conservative investors," says O’Mealia. "In 1995
they typically had only 29 percent of their portfolios in domestic
equities. Although that has increased to 38 percent today, in our
view, they are still underweighted in equities, especially given that,
according to our survey, their number one investment goal is to
assets. As well as they’ve done in the bull market, they could have
done considerably better."
The boomers have not been extravagant, if you consider that just 26
percent plan to buy a nicer, bigger house. Only 18 percent have bought
or are likely to buy a vacation home. As for luxury items, only 30
percent have bought, or plan to buy, jewelry or furs. And these
were given right before Christmas.
As a matter of fact, nearly half plan to spend stock market games
on reducing debts, and 64 percent will increase charitable
Travel professionals will be also be happy to note that 45 percent
reporting spending their bull market gains on vacation travel.
Corrections or additions?
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