The Retiring Baby Boomers

Financial Advising for Baby BoomersAs a broad asset class, bonds are generally acknowledged to be a safe haven in volatile markets and a key component in virtually every investor portfolio. The bond markets are influenced by two major forces.  The Federal Reserve plays a major role in moving bond prices by its policies due to the current economic environment, and supply and demand in the market. The U.S. bond market is one of the most efficient, largest, and most liquid securities market and the place where hundreds of billions of dollars are invested every day on the prospects for the economy.

Bonds are issued by corporations, municipalities, agencies and the U.S. government to raise money. When you purchase a bond, you are actually making a loan to the issuer. That issuer then promises to pay you a specified interest rate and return the face value of the bond at maturity. All bonds are liquid investments, meaning that they can be bought and sold before maturity. However if you sell the bond prior to maturity it could be worth more or less than you paid for it.

Investors utilize individual bonds in their investment portfolios to meet their performance objectives. How much of your assets should be invested in bonds depends on your current income needs. Regular cash flow is very important to the current value of your portfolio. Most important in any prudent investment strategy is to diversify an equity portfolio with bonds to help offset stock market fluctuations. Investors buy bonds for the following primary reasons: Current income, safety of principal, diversification, and short and long term growth.

In general, your age and your current income needs are very important factors in determining how much to invest in bonds. The prevailing rule is to invest whatever your age is plus or minus ten percent. For example if you are age 60, you would have sixty percent of your portfolio in fixed income securities. Aging baby boomers have been a topic among investors for quite some time. With a demographic of more than 76 million in the United States, they’re the biggest and richest generation in history. With a baby boomer turning 60 every eight seconds, this segment is expected to comprise 20-25% of the U.S. population in about 20 years.

In a recent article, Jay Peroni stated, “As a group, baby boomers have accumulated a lot of wealth. With the average baby boomer predicted to retire with $500,000 and $1 million in assets, this group is estimated to have $7 trillion in wealth, which accounts for nearly 70% of the total wealth in the United States.” So as they get closer to retirement they’ve been shifting toward low-risk investments. Many have already begun shifting their portfolios from stocks to fixed-income securities, a trend that’s likely to continue for many years to come.

For more information on Summit Brokerage Services, an independent broker-dealer, visit or contact us at (800) 354-5528.

Source: Jay Peroni (2012, December 27, 2012) “Get rich from retiring baby boomers with this little know stock.” Street Authority

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