"How to Use Investing for Income to Protect Yourself from the Coming Age Wave of Retiring Baby Boomers"

What happens when the pig in the python reaches retirement age?

The pig in the python is the how demographers refer to the baby boom generations. You're a boomer if you were born from 1946 to 1964.

Our fathers returned home from World War II and Korea determined to take care of business with their girlfriends-soon-to-be-wives with the same enthusiasm as they defeated Tojo and Hitler and stymied the Commies.

And in suburban bedrooms all over the country, they created the largest generation in history -- all 76 million of us.

We started changing the country's economy as soon as we were born

We created a boom in demand for diapers and Gerber's baby food. We passed thousands of municipal bonds designed to raise money to build schools for us.

Then we sat in front of the TV watching Captain Kangeroo, Romper Room and The Mickey Mouse Club.

We were poor compared to today's teenagers (Most of our parents thought credit cards were evil, so they certainly didn't give any to us! And there weren't nearly as many shopping malls to hang out.)

Still, we had a huge economic clout just from sheer numbers. We boosted the success of Marvel Comics, Edgar Rice Burroughs paperback editions, The Lord of the Rings, and Conan the Barbarian as well as the Ace Science Fiction Specials edited by Terry Carr and the Ballantine line of adult fantasy.

Yet our biggest impact as we were growing up was on the music industry

It would have grown tremendously anyway, because older boomers were already listening to Top 40 radio and The Beach Boys, Jan and Dean and Bobby Darin before February 9, 1964 --

But there's no doubt that The Beatles tremendously accelerated this process. We made them and they made us -- and the entire rock industry that's followed.

The huge numbers of us graduating from high school and college from the late 60s to early 80s helped drive up the unemployment rate. (I remember my boss at Pizza John's once showing me his stack of applications -- it was at least two inches high. A Domino's I know of can barely get any applications at all.)

And those of us who did get jobs and who got married and started having babies and needed houses -- we drove up real estate prices sky high in the 1970s.

They dropped down somewhat in the late 80s due to changes in the tax laws, but there's also no doubt that wealthy boomers are behind the recent rises in prime real estate, especially in areas where people want to go to retire, such as Florida.

And there's no doubt that our buying stock for IRAs, 401(k) plans and so on is responsible for a lot of the bull market in stocks from 1982 on.

So what's going to happen when we start to retire?

The first baby boomers become eligible for early Social Security retirement benefits in 2007.

Although the risk to Social Security trust funds gets the most publicity from the media, it's important for you to understand that every form of retirement income is at risk.

We boomers will place unprecedented demands on EVERYTHING.

Many -- if not all -- pension funds are underfunded.

The federal government's Civil Service Retirement Systems.

The federal government's FERS system.

All local government retirement plans.

And that's not to mention health care. Who's going to pay for all the medicine and hospital stays and so on of 76 million elderly boomers?

It's important for you to understand that this will impact all stock and bond markets around the world

Because here in the U.S. we're actually in better shape to handle the problem than Europe (where people are already accustomed to retiring at an earlier age than Americans do and Japan).

It's the normal pattern for people to acquire stocks and bonds while working, then sell them when they retire.

But who is going to buy the trillions of dollars in stocks and bonds that us 76 million boomers will be selling?

Nobody really knows.

There aren't enough people in the younger generations to buy everything we boomers own

Dr. Jeremy J. Siegel suggests that it'll be the investors of the rapidly growing developed world, especially India and China.

That may happen. I don't know.

My point here is to help everyone visiting this website, not to come up with some policy to save the entire world.

This issue is one of the reasons I converted to a growth/capital gains investor to an income investor.

If you're a baby boomer, don't sell any investment you have that's bringing you income. But don't live on that income until you retire. Reinvest those dividends and income.

If you now have growth stocks, sell them and invest the money into dividend paying stocks.

When you retire, live on those dividends and interest.

Don't sell -- it's quite likely that you'll get a lot less than you think

If I'm scaring you, good -- if you haven't thought about this issue, you need to.

It's going to start happening in a few years.

Millions of baby boomers will want to sell those growth stocks. Who will buy them?

There's another advantage to becoming an income investor now. As they get closer to retirement or begin it, many boomers will realize that they need income investments.

Many will be looking to sell "growth" stocks to a shrinking pool of investors

Then many will take their retirement money and understand they need more income, so they'll look around to educate themselves and learn about income investing.

So I expect this website to have a long, useful life.

But for everybody getting in on income investing early -- you may well see a huge market price appreciation in your dividend paying stocks, because the refugees from growth stocks will be in the market bidding up the prices, driving dividend and bond yields to outrageous lows.

My opinion -- ignore the chaos, enjoy your life and keep cashing those dividend checks.

So invest now in things that will bring you income, and preferably an ever increasing stream of income, to cope with the inflation that may follow. That's what you need. If you have the income to live as you please, you can ignore the drop in market prices.

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Before the subprime mortgage mess makes stock market goes down more . . . before the stock market goes up, making dividend paying stocks more expensive . . . before the rising cost of gas, gold and food -- and the sinking U.S. dollar -- put the world into a recession . . . before retiring baby boomers start selling off their growth stocks . . . before you need investment income just to eat!

  

7 Reasons to Invest for Income -- NOW More Than Ever

Rick Stooker

• The greatest secret to income investing (Einstein called it "The most powerful force in the universe")

• What -- historically -- gives stock market investors 1/2 of their total returns (from 1929-1954; 1966-1981; and 1999-mid-2008 it was the ONLY way to make money from the stock market!)

• How to avoid suffering from accounting fraud. Automatically keeps you from throwing you money away on future Enrons, Tycos, and WorldComs

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