Will Retiring Baby Boomers Pull Us out of This Recession

The deluge of unending bad economic news is enough to make Pollyanna turn downright crabby. Stocks are down, Madoff type pyramid schemes are up, and real estate can barely be given away in some parts of the country. What is worse is that Americans have forgotten their economic history. Lost is the experience we learned the hard way - that lack of confidence fuels the downturn – individuals and businesses continue to feel worse, cutting back more, so more and more people lose their jobs. The bad news cycle just goes on, until some magical day (Inauguration Day!?) when confidence returns, people start spending again, and businesses feel like they have to hire more people to keep up with demand.

Baby Boomers as Captain America, the potential savior of the free world
More impossible schemes have come true. Picture this scenario, which is based on solid numbers – millions and millions of baby boomers will be in their early 60’s this year. Almost all are close to retirement, and a significant percentage already have the resources for a comfortable one. Perhaps they invested wisely in the stock markets and shielded a lot of it from last year’s big downturn. Or they have a secure government pension that they can count on for the rest of their life. If even a small percentage of them were to invest in their retirement dream home in 2009, hire a lawyer for the closing, pay a real estate commission, pay for a moving company, buy new furniture and household items, do some small remodeling – the impact on the national budget would be huge. Their self-interest would be the confidence that they are buying low – for real estate and services.

As a strategy, we would not deny that it carries some risks. Many will no doubt find this prescription too radical. Given 2008’s performance, real estate and stock values might sink even further, and the pensions of even the soundest governments or corporations could be compromised. On the other hand we might be looking at a period of genuine opportunity, one that could help restore confidence and even do some good. At the least though, you can take this strategy as a rationalization to tell your friends why, as Captain America, you just had to save the free world and buy into that great active adult community in 2009!