Baby Boomers have a high net worth but little retirement savings.
A whooping 76 million babies were born after World War II, between the years of 1946-1964.These Americans are called “Baby Boomers.” They are an eclectic demographic, but there are characteristics most share. Baby boomers are currently the wealthiest generation.
Characteristics of Baby Boomers
Baby boomers were the first generation to grow up with a television. They entered life as consumers, since their families began to have more disposable incomes. They lived during the height of Woodstock, the Vietnam War, and saw the Apollo 11 moon landing. Corporations grew more profitable, labor unions promised higher wages, and consumer goods became more affordable during their adulthood.
Baby boomers are generally a hard working group. They sacrificed and put in long hours to climb up the career ladder. The demographic had more educational and financial opportunities than previous generations. They set goals and achieved them. Their generation values traditions and their families’ customs.
Since 2010, 10,000 baby boomers a day have turned 65. All baby boomers will be at least 65 by 2030.
Some experts believe that this aging population will place a tremendous amount of pressure on the social welfare system.
Why Are They the Wealthiest Generation?
McKinsey Global Institute found that baby boomers have earned $1.6 trillion dollars over their lifetimes. They have $14.5 trillion dollars in investable assets. US News and World Report noted there are a few factors that contributed to their wealth.
- Baby boomers make up a large portion of the population. The demographic is 50% larger than the generation before it. They make up a larger portion of the population than generation X and millennials do. More people in a group equates to more money the group has.
- Female baby boomers entered the workforce at a higher rate than previous generations. They married later in life and had children later. More women also stayed single than ever before. There were more wage earners in relation to the total population.
- The demographic also tended to have a higher education than the generations before them. They were able to technologically advance society and conduct business on a global scale.
Boomers Net Worth
According to an analysis done by MagnifyMoney of the Federal Reserve data, Americans aged 52 to 70 have a net worth of $1.2 million. That’s 12 times greater than the millennials’ wealth. Their generation worked when there was full employment in the U.S. Wages increased, and they had more disposable income.
Boomers Retirement Savings
However, all of their net worth didn’t translate into huge retirement savings. Baby boomers may not have saved enough to last for a full, comfortable retirement. A 2018 Sightlines report found those born between 1948-1953 only saved $290,000 for retirement. Those who were born between 1954-1959 have only saved about $209,000.
If those savings are added to a Social Security income of $17,532, that’s only $29,532. Insured Retirement Institute reported in 2018 that 46% of Baby boomers think they will need at least $45,000 to live comfortably.
This may demographic may need to hold off on claiming Social Security until they are past full retirement age. They may also need to think about downsizing or finding a part-time job in retirement. Despite the financial difficulties some baby boomers will have in retirement, millennials may have it worse.
Why Millennials Aren’t Wealthy
Millennials were born between 1981-1996 This demographic is known to be lazy, whiny, and self-absorbed. They are also tech savvy and embrace alternative lifestyles.
Millennials now make up just 3% of the country’s wealth. They are crippled with student loan debt. The Q2 2019 federal student loan portfolio found that 15.1 million people ages 25-34 owe $497.6 billion in student loan debt. Many millennials pursued higher education during the Great Recession in the early 2000’s. The cost of higher education increased dramatically during that time.
Housing prices have also increased during the millennials’ adulthood.. Fannie Mae projects the average price of a home in 2020 to be $275,000. In 2000 it was only $2000,300. Rent costs increased by 46% from the 1960s to 2000, which made it even harder to save for a house.
A Wealthy Generation
Baby boomers worked hard to get where they are. There was full employment during their majority of their adulthood. They climbed the corporate ladder. They bought homes and raised children who are now Gen Xer’s and Millennials. Despite their setbacks, baby boomers are still the wealthiest generation.