Changing demographics and your money

New opportunities, innovations and challenges

August 25, 2017

With every generation comes new opportunity, innovations and challenges. The workforce and our economy can look very different from decade to decade, and as years go on, we must find new ways to work and plan for the future. As a wealth advisor, I am tasked not only with preserving and growing my clients’ money, but also staying on top of economic and social trends in order to understand and anticipate the changing world we live in. It’s not easy – but it’s fascinating, and part of the reason I love my work!

I recently came across an interesting piece by Nick Chamie of Scotia Wealth Management’s Global Portfolio Advisory Group. Chamie writes about the changing demographics in North America, noting that as Baby Boomers age, they are leaving the workforce. As this shift continues, it will create a markedly different landscape than ten, twenty or thirty years ago. The labour force is changing, and with that, Chamie hypothesizes that we will see upward pressure on wage growth, inflation and interest rates sometime in the coming decade. As he explains,

“Throughout the 1950s and 1960s, the majority of the baby boomer generation was not in the labour force, which reduced the proportion of the working age population while adding to overall goods & services demand. This resulted in rising wage growth, inflation and interest rates throughout this period, peaking in the late-1970s/early-1980s.

Over the past four decades demographic trends reversed with the baby-boomer generation entering the workforce which steadily increased the proportion of the population in the working age cohort. This resulted in a large positive labour supply shock, driving wage growth, inflation and interest rates lower since the early-1980s. Looking out into the future, we find ourselves at the doorstep of another large demographic inflection point as the baby-boomer generation has begun leaving the workforce for retirement which is set to deliver a negative labour supply shock, which we expect should apply upward pressure on wage growth, inflation and interest rates in coming decades.”

To view the full chart and accompanying text by Nick Chamie, please click here.

As always, we are keeping a close eye on our clients’ investments and the ever-changing socio-economic conditions that affect the markets. We found this piece interesting and certainly find value in its perspective. We hope you’ll find it interesting as well!

Regardless of how the markets change in one year or in ten, Mailey Rogers Group remains committed to due diligence, client care, and our clients’ financial well-being. If you have any questions about your investments, please contact us. As always, we’d be happy to discuss your financial plan and investment strategy. Thanks for reading, and enjoy the last breaths of summer!