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Why an Aging Workforce and Demographic Shifts Could Impact Stock Markets—and Flowers Foods Employees' Retirement

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'Understanding demographic trends, like the Middle-Old ratio, can offer invaluable insight for Flowers Foods 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, Flowers Foods 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:

The impact of demographic shifts, particularly the Middle-Old ratio, on stock market trends and retirement planning.
How population changes influence market cycles and economic growth, with a focus on Flowers Foods employees.
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 Flowers Foods 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 Flowers Foods 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 Flowers Foods 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 Flowers Foods 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.

What is the 401(k) plan offered by Flowers Foods?

The 401(k) plan at Flowers Foods is a retirement savings plan that allows employees to save a portion of their salary on a pre-tax basis, helping them prepare for retirement.

Does Flowers Foods offer a company match for the 401(k) contributions?

Yes, Flowers Foods offers a company match for employee contributions to the 401(k) plan, which helps boost employees' retirement savings.

What is the eligibility requirement to participate in the Flowers Foods 401(k) plan?

Employees of Flowers Foods are eligible to participate in the 401(k) plan after completing a specified period of service, typically 30 days.

How can employees of Flowers Foods enroll in the 401(k) plan?

Employees can enroll in the Flowers Foods 401(k) plan through the company’s HR portal or by contacting the HR department for assistance.

What types of investment options are available in the Flowers Foods 401(k) plan?

The Flowers Foods 401(k) plan offers a variety of investment options, including mutual funds, stocks, and bonds, allowing employees to diversify their retirement savings.

Can employees change their contribution percentage to the Flowers Foods 401(k) plan?

Yes, employees can change their contribution percentage to the Flowers Foods 401(k) plan at any time, subject to the plan’s guidelines.

When can employees of Flowers Foods take a loan from their 401(k) plan?

Employees can take a loan from their Flowers Foods 401(k) plan under certain conditions, such as financial hardship or specific personal needs, as outlined in the plan documents.

What happens to the Flowers Foods 401(k) plan if an employee leaves the company?

If an employee leaves Flowers Foods, they can either roll over their 401(k) balance to a new employer's plan, an IRA, or withdraw the funds, subject to taxes and penalties.

Is there a vesting schedule for the company match in the Flowers Foods 401(k) plan?

Yes, Flowers Foods has a vesting schedule for the company match, meaning employees must work for a certain number of years before they fully own the matched contributions.

How often can employees of Flowers Foods review their 401(k) account statements?

Employees can review their Flowers Foods 401(k) account statements quarterly, and they can also access their accounts online at any time.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Flowers Foods offers a 401(k) Retirement Savings Plan through Empower for its employees, known as the FLOWERS FOODS, INC. 401(K) RETIREMENT SAVINGS PLAN. This plan covers approximately 11,266 employees. Flowers Foods, headquartered in Thomasville, Georgia, has been in operation since 1919, specializing in the production of bread, buns, cakes, and pastries. Their 401(k) plan includes a company match program, encouraging employees to contribute towards their retirement. Employees have the option to roll over their 401(k) into an IRA or a new 401(k) if they no longer work at the company (Jobs at Flowers Foods) (Capitalize). The specific eligibility criteria for the 401(k) plan at Flowers Foods includes full-time employment, and the company offers professional growth opportunities as part of their benefits package. For 2023 and 2024, Flowers Foods has maintained this plan under Empower with consistent matching contributions

Restructuring Layoffs: Flowers Foods has recently undergone significant restructuring, resulting in the elimination of approximately 250 positions across various departments. This move is part of a broader strategy to streamline operations, reduce complexity, and improve profitability. Despite the layoffs, Flowers Foods continues to pursue growth opportunities through innovation and strategic investments, indicating a focus on long-term sustainability. It's crucial to address these restructuring efforts due to the current economic pressures and the need for companies to adapt to changing market conditions. Benefit Changes and Pension/401(k) Updates: The company has also made adjustments to its employee benefits, including pension plans. They recently purchased an annuity to complete the termination of a pension plan, which aligns with their strategy of focusing resources on more profitable ventures. Additionally, Flowers Foods continues to provide a standard 401(k) match of up to 6%, although the program remains underutilized by employees. This highlights the importance of staying informed about benefit changes, especially in an uncertain economic and political environment. Addressing these updates is crucial as they directly impact employees' financial security and retirement planning.

2022: Flowers Foods granted Time-Based Restricted Stock Units (TBRSUs) under its 2014 Omnibus Equity and Incentive Compensation Plan. These RSUs vest based on continued employment over a specific period, typically three years. The RSUs do not carry voting rights or dividend rights until they vest and convert into actual shares of Flowers Foods stock (Justia). 2023: The company continued to offer similar equity incentives, focusing on performance-contingent RSUs. These RSUs vest based on the company's performance metrics, such as Return on Invested Capital (ROIC) and Total Shareholder Return (TSR). The vesting periods for these RSUs run through 2024, ensuring that recipients remain with the company while contributing to its long-term success (Nasdaq). 2024: The company has not significantly altered its stock options and RSU offerings, continuing to use performance-based vesting criteria to motivate and retain key personnel. The RSUs remain a key component of compensation for Flowers Foods’ executives and upper management (Justia) (Nasdaq).

Flowers Foods offers a comprehensive health benefits package aimed at supporting the long-term well-being of its employees and their families. The company provides two main medical plan options: PPO and PPO Plus, the latter of which is associated with a Health Savings Account (HSA). Other benefits include Flexible Spending Accounts (FSA) for healthcare and dependent care, dental and vision insurance, short-term disability coverage, and voluntary long-term disability insurance. The company also offers an Employee Assistance Plan (EAP) and various supplemental insurance options

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For more information you can reach the plan administrator for Flowers Foods at , ; or by calling them at .

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