The nation's 79 million Baby Boomers are a generation unlike any to come before it, and as a result they'll require a unique brand of investment regulation, according to Securities and Exchange Commission Chairman Christopher Cox.
Citing outside research, Cox told attendees of last week's "The Baby Boom and Beyond Forum," hosted by the North American Securities Administrators Association in Washington, that Boomers fall into three distinct groups.
The first group, which represents the top fifth in terms of wealth, has accumulated all the funds they need to retire and will probably even have enough to leave a tidy sum to their children. The second batch, Cox said, represents the bottom fifth in terms of wealth and has saved next to nothing. They'll probably try to squeak by on Social Security, Medicare, Medicaid and other forms of government support for the rest of their lives. The third group he called "the great American middle," or 60% of all future senior citizens who have some savings but not enough to live on for the rest of their days.
What will this majority of Boomers do to survive, Cox asked? Most will work past their parents' retirement age and they'll likely stay in equities and other high-risk investments for much longer than the textbook savings plan prescribes. They'll tolerate more risk, he said, because growing their nest egg is such a high priority.
And that is where regulators must play a larger role.
"It will put millions of seniors at risk of falling victim to scam artists, at the very time of their lives when they can least afford it," Cox remarked.
Therefore, Cox called upon the securities administrators present to remain vigilant in the coming years.
"As we tackle questions like how to restructure 401(k) plans so they don't induce people to retire at a certain age; how to rethink the role of Social Security; and how to encourage the healthy segment of the huge Boomer generation to keep being productive, we've got to constantly rethink our role as regulators," he continued.
"We've got to have programs tailored to all of their diverse needs," Cox said. "This great challenge of the coming century will require our best minds and our best efforts."
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