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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

$3 million.

"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.

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