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Healthcare Provider Update: Verizon collaborates with Aetna as its primary healthcare provider, offering a range of health plans and services to its employees and their families. Looking ahead to 2026, the healthcare landscape is poised for significant change, as record hikes in Affordable Care Act (ACA) premiums are anticipated. With some states facing increases exceeding 60%, many individuals could see their out-of-pocket premiums rise by more than 75%, particularly if enhanced federal premium subsidies are not extended. This scenario could create an additional burden for Verizon employees, emphasizing the importance of strategic planning for healthcare coverage amidst such dramatic shifts in costs. Click here to learn more
'Understanding demographic trends, like the Middle-Old ratio, can offer invaluable insight for Verizon employees planning for retirement, as it highlights the potential for slower stock market growth in the future and suggests strategic adjustments to portfolios to align with shifting global economic conditions.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.
'By recognizing the impact of demographic shifts, such as the Middle-Old ratio, Verizon employees can better position their retirement portfolios to navigate upcoming market changes and demographic-driven economic shifts, helping their retirement planning to remain resilient in the face of long-term trends.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.
In this article, we will discuss:
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The impact of demographic shifts, particularly the Middle-Old ratio, on stock market trends and retirement planning.
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How population changes influence market cycles and economic growth, with a focus on Verizon employees.
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Strategies for adjusting retirement portfolios based on demographic forecasts, including exposure to emerging markets.
The long-term outlook for stock markets and retirement planning is being affected by the demographic changes happening in the United States and other industrialized nations. The 'Middle-Old ratio' (M/O ratio), which analyzes the ratio of middle-aged to elderly individuals, is a key factor that investors, particularly Verizon employees, should consider when planning for the future. For those preparing their retirement plans over the next decade or more, this ratio offers a unique approach to forecasting long-term stock market trends.
The Effect of the M/O Ratio on Stock Markets
The M/O ratio is determined by dividing the number of individuals aged 40 to 49 by the number of people aged 60 to 69. This metric has shown a strong correlation with long-term stock market cycles, especially in the S&P 500. Research conducted by Alejandra Grindal, chief economist at Ned Davis Research, has revealed that shifts in the M/O ratio often coincide with significant highs and lows in the stock market. 1
For example, in 2000, when the internet bubble burst and the 1990s bull market reached its peak, the M/O ratio reached its highest point. This marked the end of an era of rapid economic growth and stock market gains. Following this peak, the ratio began to decline, mirroring the 2008 global financial crisis and the subsequent bear market. Since the middle of the 2010s, the M/O ratio has been rising, indicating that a shift may be on the horizon within the next decade.
It is essential to note that while the M/O ratio may act as an indicator for long-term market trends, it is not useful for forecasting short-term market movements. For instance, it did not signal the steep market declines in 2022. Nevertheless, it remains a valuable tool for understanding the cyclical nature of the stock market.
The Influence of Demographics on Stock Market Cycles
John Geanakoplos, a professor at Yale University, has made significant contributions to understanding the relationship between financial markets and demographics. His 2002 study highlighted that many of the boom-and-bust cycles in the stock market since World War II can be attributed to shifts in population composition, particularly the proportion of middle-aged versus elderly individuals. 2 Geanakoplos explained that stock markets tend to rise when a significant portion of the population is in their prime working years and decline when a larger share of the population is elderly and no longer contributing to the economy.
This demographic shift is driven by the relative sizes of different age groups, not just the overall population. While some may focus on population growth when forecasting economic outcomes, it is the relative sizes of the middle-aged and senior cohorts that most significantly impact stock market performance.
It is expected that the M/O ratio will continue to rise into the 2030s. However, it will begin to decline again around the mid-2030s, which may signal a slowdown in stock market growth. This long-term pattern suggests that investors, particularly those at Verizon preparing for retirement, should be ready for potentially weaker equity returns starting in the early 2030s.
Taking Demographic Trends into Account When Managing Your Retirement Portfolio
Anyone preparing for retirement, especially Verizon employees with a long investment horizon, should understand how demographic shifts influence stock markets. This information can help you adjust your portfolio to align with anticipated market conditions, particularly if you are more than ten years away from retirement. As the M/O ratio seems to be peaking, it may be time to consider reducing exposure to U.S. stocks and reallocating to other regions, such as emerging markets.
For those nearing retirement, traditional strategies like those in target-date funds often recommend gradually decreasing equity exposure. For example, Vanguard’s target-date funds suggest a 30% allocation to U.S. stocks by the time an investor turns 65. However, due to demographic trends, a more cautious approach may be needed, especially for those in their 60s who wish to limit exposure to U.S. stocks.
Investors should also reevaluate the international component of their portfolios. While Vanguard's glide path recommends a 20% allocation to non-U.S. stocks, this may need to be adjusted based on the demographic outlook of specific countries. Over the next 25 years, developed nations outside the U.S. will also experience a decline in their M/O ratios, but not as sharply as in the U.S.
In the coming decades, emerging markets, particularly in Asia and Africa, are expected to see higher M/O ratios. As a greater portion of their populations enters middle age, these regions could experience economic expansion and market growth. To capitalize on these trends, it might make sense to increase your exposure to emerging markets, especially if you are nearing or already in retirement.
Conclusion: Preparing for Population Shifts and Stock Market Changes
Demographic trends, as illustrated by the M/O ratio, may influence stock markets and retirement planning. These trends indicate that starting in the early 2030s, investors, particularly those at Verizon with long-term horizons, may want to prepare for a period of potentially slower equity growth. As the middle-aged population reaches its peak, the stock market dynamics may shift, potentially leading to reduced returns in developed nations, including the United States.
To account for these anticipated demographic changes, it may be helpful to consider lowering your exposure to U.S. stocks and increasing your investment in emerging markets, where demographic trends appear more favorable. By adjusting your portfolio to reflect these long-term patterns, you can potentially position for a future with slower market growth and shifting global economic conditions. For a more sustainable retirement, begin planning now.
As the elderly population grows, the global workforce is shrinking, which could slow economic growth. A 2023 World Economic Forum report states that aging populations are contributing to a decline in the global workforce, potentially dampening economic productivity. This trend may lead to slower stock market returns and increased inflation, especially in developed countries where the aging population is advancing more rapidly.
Retirement planning must evolve as demographic changes and stock market patterns change. Understanding the M/O ratio and its implications could help you adjust your retirement portfolio, especially when considering opportunities in emerging markets. By aligning your investments with these demographic shifts, you can better prepare for a future where market growth may slow, supporting a more sustainable retirement.
Think of the stock market as a vehicle traveling along a winding road. For years, the car has been running smoothly, driven by a powerful engine (the large working-age population). But now, the engine is aging, and the fuel (economic growth and productivity) is running low. The aging population is like the car approaching a steep incline. Investors must adjust their speed, refuel with more strategic investments, and be ready for a slower journey into retirement.
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Sources:
1. Grindal, Alejandra. 'Why America's Aging Population Will Be a Problem for Stocks and Your Retirement.' Morningstar , 2 June 2025.
2. Geanakoplos, John, Michael Magill, and Martine Quinzii. 'Demography and the Long-Run Predictability of the Stock Market.' Brookings Institution , Jan. 2004, pp. 245–311.
3. Roberts, Stan. 'Why America's Aging Population Will Be a Problem for Stocks and Your Retirement.' MarketWatch , 2 June 2025.
4. VanEck Research Team. 'Emerging Markets: Policy Uncertainty Tempers a Strong Start to 2025.' VanEck , May 2025.
5. BlackRock. 'Five Forces Shaping Retirement.' BlackRock , Feb. 2025.
How does the Verizon Pension Plan facilitate retirement income for long-term employees, and what specific benefits can employees expect when enrolling in the retirement program provided by Verizon? What unique features does the Verizon Pension Plan offer compared to other retirement plans an employee might have encountered, and how can employees maximize the benefits of these features throughout their career at Verizon?
Verizon Pension Plan Benefits: Verizon's Pension Plan offers substantial benefits aimed at facilitating a secure retirement for long-term employees. Upon enrolling in the retirement program, employees can expect defined benefits that are based on their salary and years of service, ensuring a predictable and stable income after retirement. Unique to Verizon, compared to some other plans, may include options for early retirement under certain conditions and a choice between annuity payments or a lump-sum distribution upon retirement. Employees can maximize these features by planning for long-term service and considering their retirement income needs early in their careers.
In what ways can employees at Verizon strategize their rollover decisions when transitioning from the Verizon Pension Plan to other retirement savings plans upon leaving the company? What factors should be considered by Verizon employees to ensure they are making informed choices regarding rolling over funds to a traditional IRA or another qualified employer plan?
Rollover Strategies: When transitioning from the Verizon Pension Plan to other retirement savings options upon leaving the company, employees should strategize their rollover decisions carefully. Factors to consider include the tax implications, the investment options available in the rollover destination, and the timing of the transfer to avoid penalties. Verizon employees should evaluate the benefits of rolling over to a traditional IRA or another employer's plan, considering their future financial needs and retirement goals.
What are the implications of the recent IRS limits for 2024 concerning contributions to retirement plans for Verizon employees, and how does Verizon align its offerings with these federal regulations? Additionally, how can Verizon employees best take advantage of these limits to enhance their retirement savings while adhering to tax regulations?
IRS Contribution Limits: The implications of IRS limits for 2024 are critical for Verizon employees as these limits dictate how much can be contributed tax-deferred into retirement plans. Verizon aligns its offerings with these federal regulations by adjusting contribution limits in their plans accordingly. Employees are encouraged to maximize their contributions to take full advantage of tax-deferred growth, especially when IRS limits increase, thereby enhancing their retirement savings while adhering to tax regulations.
How does the special tax treatment for lump sum distributions from the Verizon Pension Plan affect employees who receive their benefits early or have specific circumstances, such as being born before 1936? What options do these employees have to manage their tax burden effectively, and how can they best navigate these complicated rules while planning for their retirement?
Tax Treatment of Lump Sum Distributions: The special tax treatment for lump sum distributions from the Verizon Pension Plan can significantly affect employees who opt to receive their benefits early or under specific circumstances like being born before 1936. These employees have options to manage their tax burden effectively by opting for ten-year averaging or capital gain treatment on eligible distributions, allowing for a potentially lower tax rate on their pension benefits.
For surviving spouses and alternate payees of Verizon employees, what are the specific benefits available under the Verizon Pension Plan? How do these benefits compare to those available to employees, and what steps must surviving spouses or alternate payees take to ensure they receive their entitled benefits without delays or complications?
Benefits for Surviving Spouses and Alternate Payees: For surviving spouses and alternate payees, the Verizon Pension Plan offers benefits similar to those available to employees, such as annuity payments or lump-sum options. These beneficiaries must take certain steps to ensure they receive their benefits without delays, such as providing necessary documentation and adhering to plan rules. The plan details and processes for claiming benefits should be clearly understood to avoid complications.
How can Verizon employees utilize the resources available through the Verizon Benefits Center to better understand and manage their retirement benefits? What specific tools and services does the Benefits Center provide, and how can these resources assist employees in making informed decisions regarding their pension plan options?
Utilizing Resources at the Verizon Benefits Center: Verizon employees can utilize various tools and services provided by the Verizon Benefits Center to manage and understand their retirement benefits. The Benefits Center offers personalized consultations, detailed plan documentation, and tools for estimating pension benefits and planning retirement income, assisting employees in making informed decisions about their pension plan options.
What challenges might Verizon employees face regarding eligibility and tax withholding when receiving their pension payments, and how can they mitigate these issues? It's crucial for employees to understand the mechanics of eligibility regarding rollovers and payment processing; what key pieces of information should they be aware of to avoid unexpected taxes?
Challenges in Eligibility and Tax Withholding: Verizon employees might face challenges regarding eligibility and tax withholding when receiving pension payments. Understanding the plan's criteria for eligibility, the implications of rollovers, and the impact of mandatory withholding on distributions is crucial. Employees can mitigate these issues by consulting with the Verizon Benefits Center or a tax advisor to ensure compliance and avoid unexpected taxes.
What is the process for Verizon employees wishing to initiate a direct rollover from the Verizon Pension Plan, and what documentation will they need to prepare? Can employees receive assistance from the Verizon Benefits Center during this process, and how does using a direct rollover benefit them compared to other forms of payment?
Direct Rollover Process: The process for initiating a direct rollover involves deciding the destination of the rollover (traditional IRA or another employer plan), completing necessary documentation, and potentially seeking assistance from the Verizon Benefits Center. A direct rollover helps in avoiding immediate taxes and maintaining the tax-deferred status of retirement savings.
In terms of retirement preparedness, how does the pension plan at Verizon accommodate employees’ needs for financial security in their senior years? What additional education or resources does Verizon provide to assure that employees fully understand their retirement options and the importance of planning ahead?
Retirement Preparedness: Verizon's pension plan is designed to accommodate the financial security needs of employees in their senior years. In addition to the pension benefits, Verizon provides educational resources and planning tools to ensure employees understand their retirement options and the importance of early and consistent retirement planning.
How can employees reach out to the Verizon Benefits Center for further information about the pension plan and other retirement benefits? What specific contact methods are available to employees, and how can these interactions enhance their understanding and management of retirement benefits provided by Verizon?
Contacting the Verizon Benefits Center: Verizon employees seeking more information about their pension plan and other retirement benefits can reach out to the Verizon Benefits Center through various contact methods such as phone, email, or online portals. These interactions are crucial for enhancing understanding and effective management of retirement benefits, ensuring employees make the most of the benefits available to them.
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