Retiree Perfect Storm Coming In 2020 and 2021?

What a year for investors. What a decade for investors.

We’re going to be reading all about it in the next several days since it makes such a great narrative.

So I thought I’d join in and offer up my brief take.

The Vanguard Balanced fund (VBIAX) is up more than 26% from the closing low last December while the Vanguard Target Retirement 2020 fund (VTWNX) is up more than 20%.

So, retirees or those quickly approaching retirement have seen their balances soar – assuming they have been invested properly. 

Now think about this – the Baby Boomer generation is accepted to include those born between 1946 and 1964. That puts 1955 smack-dab in the middle. Now add 65 years to 1955, and what do we get? 2020.

Full Retirement Age, per the Social Security Administration, for those born in 1955 is not until they hit age 66, so that is not until 2021. My point is that could 2020 be ‘peak retirement’ given the massive US equity and bond market appreciation over the last 52 weeks and the Boomers reaching their Full Retirement Age? 

I don’t think this has any implications for the stock market since we have already seen equity outflows this year while the stock market has coincidently seen massive gains, so I think we can put to bed the myth that retirees’ withdrawal from stock funds will kill the market. What if, however, there are implications for the broader economy? 

Perhaps we will witness older, less tech-savvy, higher-compensated employees exit-stage-left and younger, cheaper employees will essentially fill the gap. I’m no economist or business expert, but it will be interesting to see if this narrative indeed shows itself in the coming year or two.

Nevertheless, enjoy your year-on-year portfolio and net worth changes. This too shall pass.

vanguard balanced index mutual fund price chart analysis investing returns year 2019 - retirement perfect storm

I am a Chartered Financial Analyst (CFA) and Chartered Market Technician (CMT). I have passed the coursework for the Certified Financial Planner (CFP) program. I look to leverage my skills in an hourly-fee consultant role for financial advisors – that could be portfolio analysis, planning, writing etc. Please reach out to me at mikeczaccardi@gmail.com for more information. Connect on Linkedin.

Twitter:  @MikeZaccardi

The author may hold positions in mentioned securities.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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