08 October 2006
By Gregory Bresiger
Meet the RINKs.
The recently named demographic group - which stands for retired, independent, no kids - is a subset of the baby boomer generation and is one of the fastest-growing segments of society, according to the U.S. Census Bureau.
And with the sizable boomer generation fast approaching retirement age, RINKs could further exacerbate the problems of an already troubled Social Security system.
At the same time, RINKs also have unique personal finance needs and need specially tailored plans, according to Raymond Mignone, a Little Neck financial planner who coined the acronym and recently wrote a book about the group.
"For the typical RINKs client," Mignone said, "at least 60 percent of a portfolio should be in equities. The rationale is that stocks tend to earn more than bonds and cash over the long term, although over the short term stocks can be volatile. But RINKs must plan for the long term."
Mignone defines RINKs as having a liquid net worth of at least a $500,000 - making them independent.
According to the folks at the Census Bureau, couples with no kids whose husband is 55 years old or older represented 33.6 percent of all similarly aged couples in 2005. In total, there were 19.9 million couples in that group - up 13 percent from five years earlier.
Mignone said RINKs need special financial planning advice because, while they have no kids and don't have to worry, for example, about funding college costs, they also are unlikely to have close relatives to care for them as they age.
Indeed, their biggest economic mistake, Mignone warns, is "not investing aggressively enough prior to retirement."
"These kinds of clients are going to need to have a large part of these investments in stocks; probably 50 percent to 70 percent," according to Michael Kitces, a certified financial planner in Columbia, Md.
"Who is going to be the caregiver when there are no children?" Mignone asks.
And this need for a greater level of services is going to affect all of us, said Fed chief Ben Bernanke last week in a speech to the Washington Economic Club.
"As the population ages," he said in a recent speech, "the nation will have to choose among higher taxes, less non-entitlement spending, a reduction in outlays for entitlement programs, a sharply higher budget deficit, or some combination thereof."