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The Silver Tsunami: Questions and Answers

Today, the Silver Tsunami is being discussed more and more. It is an issue that will affect commercial real estate and a great deal else. Read below to learn a few quick facts about this event.

What is the “Silver Tsunami?”

The “silver tsunami” is a phenomenon which refers to the exit of a large number of baby boomers from the workforce as they reach retirement age. News organizations have been slowly reporting on the issue for years now. It stands to have a major impact on a wide variety of markets over the next decade.

So what does this mean?

Many baby boomers own small businesses, meaning if they do not plan ahead for their retirement, local economies stand to lose a large number of businesses in a short amount of time.

As far as effects on the real estate market, for one there are predictions that the aging population will drive interest rates up. Right now banks have a larger supply of money to lend, due to high household savings rates–but as those savings start to be spent changes are bound to follow. More on that: “The next threat to RE prices: demographics”

When will this happen?

Right now. The first of the baby boomers (born between 1946 and 1964) reached the age of 65 in 2011. According to the Social Security Administration, about one-third of the workforce reached retirement age in 2015.

How quickly will the rest leave the workforce?

When people first discussed this phenomenon, a statement circulated claiming that 10,000 baby boomers retire every day. The Washington Post published an article (Do 10,000 baby boomers retire every day?) three years ago that explained where this number came from. In short, the figure, while not taking into account people retiring at different ages, is accurate in theory.

How can we prepare?

Business and political leaders are urging business owners to develop succession plans as soon as possible. Larger businesses are being urged to work with employees about to retire to groom replacements or look for outsiders to fill open positions.

 

Overall, as this generation grows older, changes are coming that will shake a number of industries. The first step, however, is to be aware of the issue and begin to prepare for what is to come.

 

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