At one point or another, you’ve probably heard the speculation that once the Boomers start selling their stocks and mutual funds to support their retirement, the flood of sales will cause the market to crash. That’s plain wrong: the Boomers were born over a period of 18 years, and they will retire over a similar span; moreover, most of them will not start cashing in their stocks immediately. Most people, evidence shows, wait to break into their 401(k)s until they have to. David Wise, the head of the National Bureau of Economic Research’s aging program, has, along with his colleagues, run multiple models looking at what will happen as the Boomers sell out, and he believes the effect will likely be modest.

But the outlook for equity markets is cloudy nonetheless. The problem is more basic: stock prices reflect both a company’s current earnings and its expected growth in earnings. A high price-to-earnings ratio means investors expect fast growth in future earnings. If you think economic growth is going to slow, the stock market looks overvalued today. Historically, stocks in aggregate have tended to trade at P/E ratios between 12 and 20. Right now, the P/Es of the three major indexes are on the high end of that range, implying the expectation of faster-than-usual economic growth. That sort of growth will be awfully difficult to achieve as the Boomers retire—and the problem could persist for decades. It is possible that, as the Yale economist Irving Fisher infamously said in 1929, “Stock prices have reached what looks like a permanently high plateau.”

Many analysts have joined the debate over whether the Baby Boomers have saved enough for retirement. Optimists tend to look at the amount Boomers have saved relative to their incomes, compared with how much their parents had saved at the same age. But Boomers are living longer, so they will need more money than their parents did. And even with the new prescription-drug benefit, they can expect to spend more on health care.

Perhaps most important, the Baby Boomers have fewer children. My grandmother has one daughter living nearby to help with shopping, another (my mother) overseeing her finances, and a third who is only a plane-flight away in case of emergency; when my grandfather was dying, my mother drove up to Newark for weeks at a time. My parents’ familial support network will be thinner: divorced and living in different cities, they will have to share the same two daughters. Given the vicissitudes of the modern economy, neither child may be living nearby when help is required. This is demographically typical, which means that not only will the Boomers be paying for help that family used to provide, they will also have fewer people to call on for financial assistance.

Despite all that, the Boomers themselves are remarkably optimistic about their prospects. A 2004 survey by the AARP showed that a solid majority are confident of their ability to prepare financially for retirement, which may be why 69 percent of them say that they are fairly or very optimistic about the future. More than 70 percent of them think that they will work at least part-time, but only a quarter expect to do so because they need the money; more are expecting to fulfill dreams of entrepreneurship or just to use work to break up the routine of grandkids, travel, and bingo.