Do Retiring Baby Boomers Actually Move Markets? And How Much Do Demographics Really Matter
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 10 December 2025
⏱️ 27 minutes
🧾️ Download transcript
Summary
As Baby Boomers continue to retire, some analysts expect financial markets to feel the strain. We examine whether demographic shifts truly shape stock and bond returns, or what other factors matter more.
Topics covered include:
- Will retiring baby boomers lead to lower stock prices or higher interest rates
- Some earlier demographic predictions and how they worked out
- How do natural interest rates reflect the demand and supply of capital
- Why demographics are only one factor that determines economic growth and financial market returns
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Show Notes
Measuring the Natural Rate of Interest—Federal Reserve Bank of New York
Distribution of Household Wealth in the U.S. since 1989—The Federal Reserve
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Transcript
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| 0:00.0 | Welcome to Money for the Rest of Us. This is a personal finance show on money, how it works, |
| 0:05.5 | how to invest it, and how to live without worrying about it. I'm your host, David Stein. Today is |
| 0:10.8 | episode 546. It's titled, Do retiring baby boomers actually move markets? And how much do demographics |
| 0:17.6 | really matter? Recently, I got an email from a member of Money for the |
| 0:23.2 | Rest of those Plus. He'd been listening to a podcast by strategist Peter Zayhan. Peter says his work |
| 0:31.1 | intersects geography, demography, and energy. And in this podcast, he was describing what he says is a much bigger problem |
| 0:40.7 | that's going on with capital supplies. He contends that most private capital, capital being |
| 0:48.1 | monetary assets that are invested in corporate project, such as the AI Data Center buildout, he says most of it |
| 0:56.0 | comes from people in their 50s in early 60s, after their kids have moved out and they start |
| 1:01.4 | massively saving for their retirement. Now, he suggests it's 70% of total private capital. |
| 1:08.2 | That seems high to me. But what he's worried about now is that |
| 1:11.9 | now that 80 percent of America's baby boomers are retired, there will become more conservative |
| 1:18.2 | in their investing and move much of those savings from stocks to bonds. And that could potentially |
| 1:25.6 | move markets. This member had some questions regarding the |
| 1:29.5 | potential impact of the savings that the baby boomers were doing, and then the dis-savings they'll |
| 1:35.5 | do, and particularly how it could have impacted a variety of asset classes, including corporate |
| 1:41.0 | bonds, non-investment-grade bonds, where the incremental yield or spread is very, very |
| 1:46.4 | narrow and whether that savings action contributed to that. We'll address that, but first I want to |
| 1:53.6 | talk about the whole idea of using demographic trends to make investment predictions. |
| 1:59.5 | I first became aware of this approach back in 1999. At the time, |
| 2:04.9 | I was on our executive committee at my institutional advisory firm or as a partner, FECD advisors, |
| 2:11.2 | and we were in the process of selling the firm to allow the founders to exit. And so we had investment bankers that we used, |
... |
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