It's one of the reasons why people think the market can't go down and is the only game in town. However, demand by baby boomers is not necessarily going to propel the market, in theory. There are too many other factors affecting it. The market does not have to crash just because baby boomers are retiring in 20 years, because the rest of the world is growing and might buy the stocks then. So consumers cut back on expenditures and investors cut back on expenditures.
Confidence is very hard to model.
The stock market crash must have played a very important role in this decline of confidence. But as I noted before, the 1987 crash had no such effect. An important difference between now and 1929 is that we're no longer on fixed exchange rates and the Fed does not need to pursue a tight monetary policy as it did in the early 1930's. I think that the Fed would take action to prevent a real depression. But a recession is quite a possibility.