Baby Boomer Retirement Dreams in Jeopardy: Recessionary Squeeze Tightens Grip on Investments

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A recessionary squeeze is threatening the retirement dreams of Baby Boomers, leaving their investments in an uncertain future.

Australia’s economic outlook has come under threat as the IMF predicts potential risks and slower growth into 2023. With their finances heavily invested, baby boomers risk experiencing considerable losses due to persistent inflation and uncertain sectors.

After economists determined that Australia had avoided a recession, economic growth for 2023 is anticipated to decrease. The Reserve Bank of Australia has worked hard to boost the official cash rate from 0.1% at the beginning of 2022 up to 3.1%, and according to an industry panel run by The Conversation, this trend may continue into next year with predictions showing potential increases in bank’s cash rates target rising as high as 3.6%.

The future of the Australian stock market could be uncertain, with a panel of economists predicting interest rates to hike in 2023. This is expected to create slower demand for equities and likely cause share prices on ASX exchanges across Australia to drop.

GlobalData’s Retail Investments Analytics 2022 reveals the potential of such unpredictable shifts affecting investors nationwide.

“Baby Boomers are at a financial crossroads as they look to secure their retirement. With inflation expected to remain high, their investments will likely be affected due to decreased consumer spending and lower potential returns,” says a senior analyst at GlobalData.

Despite the broad market downturn in 2023, global investment pain won’t be shared equally. According to GlobalData’s Investor Insights: Investment Drivers Analytics 2022 report, baby boomers had disproportionately more wealth invested in equities than other generations at 32.1%. Meanwhile, Generation Z is far less exposed, with only 18.9% held as equity investments – making them most capable of weathering this economic period ahead unscathed.

“For those Baby Boomers set to retire shortly, access to their assets could be limited,” says the analyst. “This is a worrying trend that has caused financial uncertainty amongst this group of investors and will likely result in significant changes to their retirement plans.”

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