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Baby Boomers May Turn Out To Be A Bust

The retirement of baby boomers will not only affect the US, but also many countries around the world. This has many significant public policy implications for the future.

A draft version of the baby boom study [SmartMoney] [1] covering this phenomenon was recently completed by Decision Economics [2] that found:

Over the next 10 years, the American work force will become increasingly tight as the approximately 77 million members of Generation Baby Boom retire, according to the report. When these folks leave their jobs, they’ll be so hard to replace that the U.S. economy will grow at a significantly slower pace than it has been in the last 10 years.

Here’s a draft of the study (pdf) [Brookings Institution] [3]

The predictions in the study:

The concern for housing as it relates to baby boomers is the fact that there will be a smaller demographic to buy the houses sold by the boomer generation. They are currently driving the second home market. Higher interest rates and lower demand because of fewer buyers could keep property appreciation tempered.