Don't fear the boomer

NEW YORK (Money) -- Question: I'm 30 years old and invest regularly in my 401(k). So far, my account has been doing well, but I wonder whether that might change when retiring baby boomers stop making investment contributions and begin taking money out of their retirement accounts. Are we in for a bump down the road when the boomers retire? - Jason, Salt Lake City, Utah

Answer: News flash: The financial markets do not revolve around the baby-boom generation.

I know that may be hard to believe at times. Turn on the TV and you're practically inundated by ads from financial services firms offering all sorts of investment products and advice to retiring boomers. And the boomers themselves could certainly never be accused of underestimating their influence.

Indeed, at risk of incurring the wrath of my fellow boomers, I think I can safely say that my generation is one of the most self-absorbed and self-important in the history of the U.S., if not the world.

But if you're looking for things to worry about when it comes to investing your 401(k) and planning for retirement, your first priority should be making sure you're handling the current market turbulence the right way. (For tips on how investors in all stages of retirement planning can do that, click here.)

And even after that, there are lots of other things you should focus on, such as saving as much as you can and getting the most from your 401(k), before worrying whether boomers selling down their retirement assets will trigger a market meltdown.

In fact, I don't think the boomer effect should get much of your attention at all. Why? Well, for one thing, as my colleague Penelope Wang noted in her Thirteen Retirement Myths feature story in the latest issue of Money magazine, stock holdings tend to be concentrated among the very wealthy, who are not likely to have to unload all their assets during their lifetimes. Much of their wealth will remain invested so it can be passed on to their lucky heirs.

So the notion that virtually all of the boomers' retirement wealth will be dumped onto the market resulting in some huge mismatch of selling vs. buying that will drive down prices isn't a very accurate one.

This was essentially the same conclusion that MIT economist James Poterba reached in a paper he presented a few years ago at a summit meeting of central bankers from around the world, as well as what the Government Accountability Office found in a report on threats to retirement security that it released last year.

I haven't undertaken any such study, but the idea that selling from the boomers or any one group is going to bring down the stock market doesn't make sense to me on the face of it. After all, stock prices are set by the interplay of supply and demand from investors all around the world, not just the U.S.

And even if massive selling from the boomers did start to drive down stock prices, it's not as if stock prices would fall into a black hole and stay there. At some point, stock values would become so attractive relative to bonds, real estate and other investments that investors would bid stock prices back up until they settled at some equilibrium where they represented a fair value versus the alternatives.

So I suggest that all you younger investors out there focus on saving as much as you can in 401(k) and other retirement accounts and investing those savings as sensibly as you can. (For advice on how to do that, I suggest you check out my recent Money Magazine feature, Get On Track For Retirement.)

And don't waste your time or effort worrying about what the boomers will do in retirement. Truth is, they're not sure themselves.