What’s So Magic About Age 65?

Baby Boomers are the generation that sprung up, literally, on the heels of World War II, which ended in 1945. Returning soldiers and their wives had children at unprecedented and sustained rates for the next generation, which experts peg ending in 1964. So Baby Boomers, born between 1946 and 1964 formed a huge population bubble that has changed the shape of America.

According to a 2013 article by Axial (Axial is a leading network that combines business owners with sources of capital), about two thirds of all businesses with employees, or about 4 million businesses, are owned by baby boomers. Many of these companies are very small mom and pop operations with very few employees. This blog deals with larger businesses, say with value on the low end of $5 million or so and ranging to many billions of value.

My observation from dealing with hundreds of business owners and attending many conferences with hundreds or thousands of owners present is my thought that Baby Boomers comprise at least two thirds, and likely more, of the ownership of larger businesses in America.

There are a Lot of Boomers

According to 2012 U.S. Census data, there are some 76 million Baby Boomers in the nation, or about 25% of the population. At this time, Boomers range in age from 51 to 69. However, in 2015, the Millenials, who are aged 18 to 34 at this time, will overtake the baby boomers in size (Pew Research). This is because immigration continues to swell the ranks of this age group.


Pew Research: Projected Population by Generation

Generation X, the “sandwich” generation between Baby Boomers and Millenials, is smaller than both, primarily because of lower birth rates in America during their birth years of 1965 to 1980.

There is relatively little immigration in the boomer age category. With the oldest Boomers now 69, this group is on a long path of attrition. As I write this, it sounds crass, but it just factual. No one lives forever and the Baby Boomers are projected to decline in number over the coming decades.

Pew Research published a forecast of population by existing generation groupings that is interesting, indeed.

The Magic of 65

During the latter 1880s, Otto von Bismark, then Chancellor of Germany, initiated a “social security” program. He was responding to calls by Marxists for socialistic reforms. In 1889, a program was put in place that set the retirement age at 70.

On the one hand, he made some political hay for setting the program in place. However, and more cynically, 70 matched the average German life expectancy at the time, so the program would never be much of a drain under those circumstances. The German retirement age was lowered to 65 in 1916, during World War I. At any rate, Otto von Bismark has been attributed credit for influencing the retirement age set for America’s Social Security program, which was created as part of the New Deal in the 1930s.

The real reasons that the US retirement age was set at 65 in the mid 1930s included that 65 was the retirement age set by about half of the then-existing state retirement plans. Importantly, actuarial studies were performed that suggested that with 65 as the retirement age, the Social Security program could be sustainable with minimal taxes paid by participants.

The point is, regardless of the fact that there has been some age creep in the Social Security plan, 65 has long been something of a magic number. If one didn’t retire at that age, he or she certainly thought about it.

Baby Boomers Rapidly Turning 65

We noted above that there are some 76 million Baby Boomers. The first Boomers started turning 65 at the beginning of 2011 (2011 – 1946). Some basic arithmetic will illustrate the approximate rate at which they (“we” for many readers) are turning 65.

  • 76,000,000 Baby Boomers
  • Divide by 19 years, the duration of the generation (1946-1964) yields 4,000,000 Boomers turning 65 per year (assuming even births across the years)
  • Divide this by 365 days in a year and get 10,958 per year

Pew Research Center pegs the rate, based on their study, at about 10,000 Baby Boomers per day turning 65. My simple arithmetic says that this means that Baby Boomers are turning age 65 at the rate of about one every 9 seconds. That is astounding to me. According to the chart above, since they aren’t making any more of us (Baby Boomers), we will turn 65 over the next 19 years and experience attrition (i.e., we will grow old and die or experience premature deaths for a variety of reasons) at an increasing rate as we continue to age.

Put the Pieces Together

Baby Boomers own a disproportionate number of the private businesses in America. They are turning 65, or reaching the so-called “normal” retirement age at an astounding rate. Generation X is smaller than the Boomer generation by a significant amount and that means there are fewer of them to take the place of retiring Boomer business owners.

Following the smaller Generation X, the Millenials will exceed the Baby Boomers in numbers by 2016 or 1017. While they are the largest generation in the workforce today, they may not yet be likely purchasers of businesses from Boomers.

So what’s an aging business owner to do? Is the glass half empty and this situation is all bad?


Business End Game: Z. Christopher Mercer

Or is it half full and this situation is a clarion call for Baby Boomer business owners to plan for their impending Business End Games during Interim Time so that when they retire, gift, sell or otherwise dispose of their businesses, they will be set up for the Rest of Their Lives to live the lifestyle they desire and to be able to do the things they want to do during those years?

I think the glass is half full.

In an upcoming post, I’ll talk about what I call Highway 65, or the road that we are all on, and some of the implications for Business End Game planning.

Question 1: When will you turn 65?

Question 2: Is your Business End Game Plan in place so that when you ultimately get there, you will be set for a happy, fulfilling and financially secure Rest of Your Life?

Comment below, or do contact me to talk about any business valuation or ownership transition planning matter in confidence.

Ownership Transition Bundle Offer

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In the meantime, be well.


Please note: I reserve the right to delete comments that are offensive or off-topic.

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