The idea that the Baby Boomers—who began retiring in droves in 2011—will eventually crash the stock market, has been going around for years. But will it actually happen?
Cathy Pareto, president of Cathy Pareto & Associates, a wealth management firm in Miami, Fla., believes the idea is farfetched because people who retire don't just yank all of their assets out of the market at once. They gradually shift their retirement assets from higher risk equities to lower risk bonds and stable value funds as they age, she said.
"You don't plan for retirement the day before or the day after you retire," she said. "Most have moved out of the stock market and already are invested in bonds, so the premise of this idea that all of these people are moving out of the stock market at once is flawed. They can't afford to do that."
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