The Wall Street Journal reports on the race among insurers to sell variable annunities to Boomers as they begin to move assets out of stocks and other asset groups. Annuities have a tarnished history due to unethical marketing in the past by some companies. Major insurers are hoping to set that right with new product offerings that will appeal to the massive number of Boomers heading into retirement. This time around, insurers themselves face the bigger risk, as annuities carry guarantees of lifetime payment. The key question, of course: how long will Boomers live? Insurance companies are trying to do their actuarial homework:

AXA is making one of the biggest pushes around the globe into variable annuities, highlighting the promises and pitfalls of the market. It has “risk labs” in New York and Paris trying to predict what the future holds for longevity and financial markets. Could a surprise medical breakthrough — a cure for cancer, for instance — wreak havoc on the company’s longevity models? Average life spans have been rising for years in the U.S. and Europe. In Japan, more than 28,000 people are now older than 100. “Longevity is a difficult risk to price,” says Simon Harris, who heads a group of European insurance analysts for Moody’s Investors Service in London. “Unlike pricing a motor-insurance policy, where the risks are pretty well understood and you can reprice each year, with longevity, you have to put a price today on risks that will emerge many years into the future.”

According to Investment News, annuities’ lifetime guarantee could be too risky for insurers if Boomers outlive the projections and if the stock market heads south–making it difficult for providers to earn sufficient income to support payments.

File this one under “bad financial management ideas.” Fidelity Investments Life Insurance Co. forecasts rising use or reverse mortgages by Baby Boomers–in part to support their lifestyles. Stephen Deschenes, an executive vice president at Fidelity, tells Investment News are more aggressive in the way they use financial assets, and less frugal than generations that came before. “When you think about the baby boomers burning the candle at both ends, [will they tap] their home equity to eat out more often? I think [so] absolutely,” he told the magazine, which circulates to financial planners. Reverse mortgages–available to homeowners age 62 and higher–are gaining popularity quickly as a way to tap home equity and stretch retirement income.

The Federal Housing Adminstration reports this week that originations totaled 76,276 in the 12 months ended September 30th last year compared with the previous 12-month period. That number is based on the number of loans insured by FHA (around 90 percent of the total market). Countrywide Financial Corp. jumped into the market this week. Wall Street Journal coverage is here. Other major players already there include Bank of America, Wells Fargo and others.

The impact of an aging global population is well documented. The culprits fingered by forecasters usually include rising healthcare cost and shrinking labor pools. The McKinsey Global Institute (MGI) worries about another issue: shrinking savings rates. A McKinsey study of Germany, Italy, Japan, the United Kingdom, and the United States shows accelerating retirements will reduce savings rates, with a resulting enormous impact on household wealth. Solutions, McKinsey argues, are hard to come by: “MGI argues that the policy changes fashionable today—promoting immigration, raising the retirement age, and encouraging households to have more children—won’t mitigate the crisis. Yet a sustained effort to allocate capital more efficiently, boost savings rates, and close government deficits could.”

The Federal Reserve and others have pointed often to federal budget deficits and low household savings rate as a looming U.S. economic issue. In a speech last Fall, Fed Chairman Ben S. Bernanke stressed the need to boost savings rates in the face of an aging population and rising entitlement costs:

Although some adverse effect of population aging on future per capita output and consumption is probably inevitable, actions that we take today, in both the public and the private spheres, have the potential to mitigate those effects. One such action would be to find ways to increase our national saving rate. If the extra savings were used to increase the nation’s capital stock–the quantity of plant and equipment available for use by workers–then future workers would be more productive, ameliorating the anticipated effects on per capita output and consumption.

Some legislators, by the way, don’t agree with McKinsey’s conclusion that delayed retirement won’t help mitigate the problem. A bill kicking around the U.S. Senate would reward employers who establish flexible work schedules for older employees with tax credits.

Earlier McKinsey work on this issue can be found in The McKinsey Quarterly.

The Boomer Venture Summit is a great place to gain insights on entrepreneurial trends, and the types of start-up companies that appeal to Silicon Valley venture capitalists. The June 19 event is sponsored by the Executive Development Center at Santa Clara University’s Leavey School of Business and Mary Furlong & Associates. A highlight of the event each year is the $10,000 Business Plan Competition, which is open to early-stage companies developing products and services for the 40+ market. Companies that make it to the final round are judged by a panel that includes Silicon Valley venture capitalists and other experts in the field, with one prize given for the best general business plan, and a second for the best health care-related plan. I’ll be serving as a screening judge this year.

You can find the entry form here. If you’re interested in attending, registration information is here.

I wrote last week about the growing market interest in investing in the Boomer age wave, and published a list of ten picks from Reuters. Barron’s has added it’s own list of picks in a cover story last weekend. The site is for subscribers only, but SeekingAlpha has a good summary of the Barron’s article and stock picks. Usual candidates that made the list come from the health care, financial services, travel, food and automotive categories; Barron’s also seems to like clothing retailers focused on Boomers–odd timing considering the demise this week of Forth & Towne.

Forth & Towne, The Gap Inc.’s women’s clothing retailer for Boomers, will fold later this year. Best comment we’ve seen actually came a year ago when the store launched. “Forth & Towne”, wrote Slate, “was born of a statistic.” Gap’s premise: Boomer women have more money to spend than younger women, and they’re underserved by other retailers. Sure, but it’s a mistake to market to Boomers as a single market with homogenous characteristics. It’s a huge, diverse demographic segment with differing needs across age, income and lifestyle. As clothing shoppers, Boomer women are better served by the diverse offerings of department stores, which are seeing resurgent growth. Specialty catalog and online retailers also have a better shot, although even Chico’s FAS has seen growth rates stall, and its stock was the worst one-year performer among 1,000 companies in the Wall Street Journal’s 2006 shareholder scoreboard–down 53 percent for the year.