AGING BABY BOOMERS WON'T RUIN THE ECONOMY.

• Position: Brief Article

Books, articles, and commentators are predicting the worst when baby boomers begin retiring: The stock market will tumble; their decreased spending will cripple the economy; and the housing market will tank. "But demographics is not destiny. Demographic trends do not occur in a vacuum," Gail Buckner, senior vice president of Putnam Investments, a licensed stockbroker, and a long-time television broadcaster, told the Financial Planning Association, Denver, Colo. She argues that U.S. government fiscal and monetary policy, the investing and spending habits of the rest of the world, and the impact of succeeding generations will mitigate, if not erase, any potential downturn.

"The biggest flaw is that all predictions about baby boomer behavior are predicated on what members of previous generations did at a certain age," she points out. Take stock investing, for example. Traditionally, as they age and retire, investors move from stocks into more conservative alternatives such as bonds. However, boomers grew up under the haunting impact of double-digit inflation and are less likely to abandon the inflation-fighting benefits of stocks. Indeed, even today's households with people age 75 and older are keeping a higher percentage in stocks than previous generations used to do.

Hand-wringing over the stock market ignores the great demand for U.S. equities by foreign investors, Buckner maintains. Furthermore, the baby boom generation covers a 19-year span. Even if boomers grow more conservative in...