In the current uncertain economic climate, Baby Boomers — one of the largest and wealthiest demographics in America — stand to potentially lose much needed savings and wealth unless invested properly. We believe our analysis and recommendations in this report reveal several ways in which Baby Boomers can preserve purchasing power while also earning income, compounded over time.
Baby boomers are one of the largest and most prosperous demographics in the United States. Boomers are defined as adults born between 1946 and 1964, which means they are between the ages of 46 years old and 64 years old as of January 1, 2010.
There are approximately 76 million Baby Boomers in the United States. Baby Boomers and their families account for 48%, or nearly half, of all US households. Nearly 32% of two person households are headed by Baby Boomers; in three person households, 52% are led by Boomers; in households with four or more members, 64% have a Baby Boomer as head of the household.
Bulk Up On Dividends
Boomers should buy dividend paying stocks to stay ahead of inflation. As stock prices rise over time, compared to a bond, high quality dividend paying stocks also have the ability to increase dividends (yield), versus a bond which has a fixed interest rate and can be called. Even in a down market, investors will collect a stream of income from the equities, so why not get paid while you wait?
Value Stocks Are Perfect for Boomers
According to our analysis, a $1,000 principal investment in a dividend paying stock, with a 3% annual dividend yield growing at 5% per year, and modest 5% annual stock price appreciation, will grow to more than $4,000 (342%) at the end of 20 years. This return compares to just over 200% for Treasuries, and a 20 year actual historical return of 191% for the S&P 500.
We provide more detail into how CAIM works with baby boomers to help them achieve their investing goals in our report.
Catherine Avery is a regular contributor to one of the most widely known consumer insight companies for women and Baby Boomers. Please visit www.thirdage.com to read more.