Solo 401k, 401k. Big numbers, Big market. The truth behind the baby boomers IRA rollover numbers.

I read a presentation by Jack Gardner, at Thornburg Investment Management recently that included statistics I had seen before – that there is a $1.5 trillion IRA rollover market. I’ve wondered about the veracity of these numbers, but never tried to verify them.

Another common quote I see and found proof of is this – “Two thirds of Baby Boomers will retire between 2006 and 2013 (some 46 million).”

Mr. Gardner was kind enough to point me to the source of these numbers and other retirement research from FRC – Financial Research Corporation which publishes some expensive, but in-depth reports on the retirement space.

What I discovered was a terrific rabbit hole of financial information. None of it within my humble budget, but I was able to glean some insights into the self directed retirement and solo 401k opportunity. The question I have now is how do I take action on this knowledge? 

This quote in particular caught my attention from one of their 2005 reports. “In particular, FRC forecasts that the small-401(k) plan market will experience an annualized growth rate of 9.3% through 2010, far greater than the 7.3% growth projected for the overall 401(k) market, and rivaling the 9.5% expected growth of the rollover-fueled IRA market.”

Another interesting report from 2006 was on Power Boomers (given our focus on this segment, I had to take a look). Power Boomer, by their definition is an “employed investor between the ages of 40 and 60 years old.” It shares research and strategies on the needs and preferences of Boomers. Most of these studies are not focused on the solo 401k or self directed retirement market, but there are valuable pieces for our efforts and that of the individual advisor out there.

The last report I found centered on engaging Power Boomers and was published in January 2007. I was quite interested, but had to pass at the $10,000 price point.

This is all good news for many of the business owners out there (as well as solo advisors) – it says the firms who create retirement products are paying attention to the segment. It also tells the future retiree that there are many options beside the traditional ones.