Baby Boomers, born between 1946 and 1964, grew up with a more robust economy than the previous and subsequent generations. They believed in hard work, were the first to have credit cards, and, for the most part, became set in their ways.
These people are either retired or close to retirement now, and many struggle to change with the times and economy. Here are some financial mistakes retirees might need help forgetting.
1. Not Ready for Retirement
Life expectancy is higher now than it was mid-century. Boomers must prepare for a retirement that may last a decade or two longer. Also, pensions became a thing of the past, and 401(k)s were new. Some Boomers failed to take advantage of retirement opportunities offered by their employers.
2. Stashing Cash
Cash is king, as they say, and having it is great. However, many retirees overdo it with stashing the cash. Instead of depositing money in savings accounts, they store it in a mattress or shoe box. One reason is they worry about a financial collapse, and like that cash cannot be easily traced.
3. Marriage and Divorce
The rate of Boomers married is double that of Millennials. Boomers also have the highest divorce rate of any generation. “No-fault marriage” became popular during their time, meaning you could get divorced without giving a reason. Divorce costs money, and splitting assets is something Boomers are unprepared for.
4. Not Diversifying Investments
Aside from stashing cash, many Boomers failed to diversify their portfolios. They tend to like stocks and bonds and be risk-averse. Millennials are into real estate, art, and alternative investments, which are more lucrative.
5. Relying on Social Security
Many Boomers rely on Social Security for their retirement, which does not bring in enough money. It depends on when you retire and how long you work, but Social Security will only provide you with approximately 30% of your income. In 2023, retirees received around $1,400 to $1,800 a month, close to the poverty line.
6. Not Educating Their Children on Finances
Boomers raised their children to work hard to have money. They also were the first generation to have credit cards. They used credit cards to buy too much, pay bills, and survive. They also passed this bad habit on to Gen Z.
7. Buying Junk
The era of credit cards, QVC, collector’s items, and knickknacks coincide with the Boomers. They are also guilty of “Keeping Up With the Joneses” and needing to compete or have what their neighbors have. Because of this habit, they tend to buy their children and (especially) grandchildren items with little value.
8. Paying For Unnecessary Storage
All these unnecessary purchases have led to unnecessary storage. With a high divorce rate, Boomers have to downsize and not have space for everything. This causes some of them to pay for storage lockers. These end up auctioned off or abandoned for their children to go through.
9. Not Encouraging Independence
Boomers tend to support their adult children more than their parents did. It may be because of later generations’ debt or the lack of direction their Boomer parents provided. Either way, it can be a drain on their finances later in life to give out loans or pay bills for their adult children.
10. Failing to Recognize the Changing Times
Boomers encouraged their children to work hard and told them a college education would be valuable. Unfortunately, their children face student debt and much higher interest rates and home prices. Many Boomers also do not trust the internet or technology, which could save them time and money.
11. They Need an Emergency Fund
People live longer now, which means more medical expenses later in life. Boomers may fail to recognize how long their retirement will last and the increased cost of living. Having a proper emergency fund can save them from going further into debt.
12. Not Talking About Money
Boomers were raised by the generation that lived through World War II and the Great Depression. That may be why they do not like talking about money. However, by not discussing finances, they leave their heirs with surprises. They also are less likely to seek professional advice or ask for help, which may lead to more debt.