New Blog from Miami Retirement Advisor Michael Ladin Examines the “401(k) Generation” Volatility Threat
America's retiring Baby Boomers have begun withdrawing their nest egg cash from tax-deferred retirement savings plans like 401(k)s and IRAs at a rate that exceeds incoming contributions. This epic about-face after decades of steady expansion among retirement savings plan coffers should surprise no one; retirement was inevitable for America's 76 million aging Boomers.
Still, the shift--from the
The government is prepared to collect more than
Wealth management and retirement advisor
According to Ladin, as sweeping withdrawals from the 401(k) repository accelerates over the next couple of decades, the market could be facing some turbulence.
An analysis of government data provided by financial information company
"The general consensus in the retirement industry is, Boomer outflows are not likely to be replaced by Millennials, at least not at the rate they need to be offset outflow," Ladin says. "The situation could create some volatility down the road, and we need to be prepared for it."
Ladin sees 2016 as just the tip of the iceberg, as the initial swell of Baby Boomers reached an important milestone on
Boomers are the first generation to establish self-funded retirement plans around traditional 401(k)s, IRAs, and other tax-deferred savings vehicles. Boomers were introduced to these retirement savings plans in the mid 1970s before the plans became broadly circulated in the 1980s. This system of employee-financed retirement was part of a monolithic shift from the defined pension benefit plans of their parents' generation, to employer-sponsored 401(k) plans, an alternative to costly pensions.
Now the "401(k) generation" is set to collect their hard-earned savings as 2.5 million Boomers reach age 70 this year, according to
Estimates vary on how long the 401(k) net outflows will last and how extreme they will become. Financial-services research firm
According to Cerulli, Boomer nest egg funds could remain with the retirement industry if they move 401(k) funds to IRAs upon retirement. Contributions into IRAs are anticipated to reach
Some industry insiders speculate that Millennials will reverse the outflow pattern, although others don't anticipate Millennials becoming the savers they will need to be any time soon.
But even if Millennial motivation to save improves, it will take some time for the 401(k) decumulation trend to begin reversing. Redemptions in the industry are going to get worse for the next 10 – 20 years, according to Ladin.
To learn more about retirement trends, visit the
About
The host of Retirement Radio's "Strategies for Financial Success" on NewsTalk 610 WIOD, Saturdays at
Since beginning his career in the financial services and insurance business more than 20 years ago, Ladin has built a reputation as a respected public speaker and consultant.
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Read the full story at http://www.prweb.com/releases/LadinFinancialGroup/BabyBoomerVolatility/prweb13679491.htm
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