Trickle, not a flood

The first wave of baby boomers turns 62 this year, raising concerns that the 78 million people born between 1946 and 1964 will start tapping their nest eggs en masse, pounding financial markets. But experts say the fears are overblown.

Increased life expectancies, a desire to shore up savings and a trend toward working past retirement age appear likely to stem the withdrawals.

The Investment Company Institute, the mutual-fund trade group, reports that six of 10 households with traditional retirement accounts only tap them to meet the government's mandatory withdrawal requirements beginning at age 70 ½. And the oldest boomers won't reach that age for nearly a decade.

"This rush to the sales counter to sell securities and positions, I don't think it's going to happen," says Jim Bell, president of Bell Investment Advisors, Oakland, Calif. "A lot of boomers are going to continue working in some capacity."

Bill Stone, chief investment strategist for PNC Wealth Management in Philadelphia, contends boomers will need to maintain their investments to keep up with inflation. "If you're going to live a long time after you retire, in order to keep purchasing power you pretty much better have some portion in stocks," he says.

Congress's Government Accountability Office found in a 2006 study that factors like dividends played a bigger role in stock-market returns from 1948 to 2004 than changes in the age makeup of the U.S. population. Fewer worker pensions, rising medical costs and worries about shortfalls in Social Security mean more retirees will likely stay invested longer, the GAO says.

Stone expects younger workers and newly wealthy investors from abroad will help offset outflows by boomers.