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Monday 11 Nov 2019 , 2:15 pm

Baby Boomers’ Retirement to Change US Economy, Infrastructure, and Policies

Baby boomers own nearly half of privately held businesses with employees, representing millions of companies in the U.S. As these business owners enter retirement age, a "Silver Tsunami" of business sales is likely.
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According to the records from the U.S. Census Bureau, there are approximately 76.4 million baby boomers in the U.S. As theses business owners enter retirement’s age, a "Silver Tsunami" of business sales is likely. Still given this landscape, 69% of owners are not ready to sell their businesses, with 51% citing market conditions as a reason and 61% indicating it is because they derive satisfaction from running the company.

As between 1946 and 1964, there was a drastic increase in the US population so it led to rise in the demand for daily products, housing in the suburbs, schools, roads, automobiles, hospitals and services. Obviously as per the need, this generation became responsible to develop the infrastructure of the modern US and now they own nearly half of privately held businesses with employees, representing millions of companies. 

After boomer’s retirement, there will be a massive ownership changeover of locally-held businesses. Maybe, few companies will be run by their family members, some companies will be bought by another local or large companies. But for now, many owners do not have any succession plan as well as it is hard to find a buyer for some owners when they are ready to sell. As a result, some of these companies may close down.

Recently, Stuart A. Smith III, Managing Director of Strategic Family Business Advisory Services, Emerald Advisory Services Division, Wilmington Trust said, "It's troubling that so many business owners have not taken steps to protect themselves and their businesses, and underestimate how their business will impact their personal and family wealth over the long term,". Also, he added, "Owners who do not begin planning years in advance of a transition risk suffering 'the unplanned discount' of lower proceeds from a liquidity event. A positive business transition requires ample time and foundational work. This survey shows that for too many business owners that foundational work is not taking place."  

These demographic changes will have an economic impact. There will be a shortage of working people and this will lead to the rise in wages. But on the other side, number of retired people will be more so they will require pensions and medical facilities from government and that’s why it will be expected from employees to pay considerable amount as a tax. By 2031, the youngest boomers (born in 1964) will turn 67-year old and become eligible to receive Social Security benefits.

"A change in power next year in Washington could have major implications for policy in areas such as taxes and business regulation," said Rhea Thomas, Economist at Wilmington Trust. "Trade conditions and the outcome of trade negotiations could further weigh on business investment and spill over to reduced hiring by businesses. All of these external factors have the potential to impact businesses, their values and the pool of available buyers and investors."

Neha Mule

Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.

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