NOW the Baby Boomers are Retiring

There was a lot of talk back in 2011 about the coming wave of baby boomers retiring, and what the business world was going to do about the impending business owner transition. There was a flaw in the logic, though: the age 65 does not equal retirement. In fact, for baby boomers in general and baby boomer business owners in particular, the arbitrary age of 65 means almost nothing. So, where does this leave us? We believe that the business owner transition that Nostradamus foretold is actually going to begin in the next few years.

The first baby boomer was born on January 1,1946. We actually know the first baby boomer's name (it's Kathleen Casey-Kirschling). She therefore reached age 65 on January 1, 2011. The last baby boomer was born on December 31, 1964. Google doesn't seem to know who the last boomer is. Regardless, that is a window of 18 years. If the wave of transitions corresponding to the boomer retirements had begun when Ms. Casey-Kirschling turned 65, we would be almost half-way through. But alas, the wave has not come, and many prophetic people were left wondering why.

The Committee on Economic Security selected the age of 65 as the retirement age back in 1935. Interestingly enough, the life expectancy in the U.S. at the time was 61 and didn't eclipse 65 permanently until after WWII. The current U.S. life expectancy is almost 79 years. That's a big change, yet we still think of 65 as retirement age. But if you know the boomer generation at all, you'd understand that they identify with hard work and their business (see previous blog post), and therefore are likely to continue to work long after 65. In fact, using 1935 math: we would expect the first boomer to retire at age 84 (6.5% after life expectancy), which means the first boomer doesn't retire until 2030!

That seems absurd, but the concept is that the wave is yet to come. The search fund model remains an excellent option for the transition of baby boomer businesses because it brings both capital and a successor. We are also layering on a permanent aspect that serves the population by not making the search time sensitive because when the boomers retire is up to them, not us. Whether the boomers start retiring now or in 12 years, we're ready!