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New Survey on Boomers: The Results Not Good

Posted by: Henry Baum | May 13,2008


How’s this for a perfect storm?  Right at a time when the Baby Boom generation is going to significantly tax the social security system, a new survey shows that 10 percent of Boomers are also borrowing money for everyday expenses.  The Boomer generation is roughly estimated at 85 million people.  So 10 percent is 8.5 million Boomers, a troubling number.  

The credit crunch could not come at a worse time for many Boomers imminently facing retirement.  One of the common knocks against the Boomer generation is that they’re not long term planners, having come of age with the mottos “I hope I die before I get old” or “Live fast, die young.”  Well, Boomers are both living longer and having increased trouble paying for every day life expenses. 

Baby Boomer Expenses

When you read between the lines of the new survey, however, these expenses are not necessarily because the Boomer generation is being irresponsible with finances.  No, what is happening is that 4 in 10 Boomers in the survey say that they have lent or given money to their children.  So Boomers are becoming lenders themselves, leading to them having to borrow money from other credit sources.  

Don’t put the blame entirely on Boomers’ children.  The survey of 1000 Baby Boomers suggests that Boomers have not sufficiently invested and saved for retirement.  This means any money given to their children will have a more significant impact.  The survey shows that Boomers are putting less money into investment programs like a 401(k).

Baby Boomers and the Credit Crisis

When faced with mounting expenses, an investment portfolio is often the first thing to go.  If you cannot afford groceries this week, most people will not put away money for a rainy day, if that rainy day is today.  During the credit crisis, many Boomers are facing increased interest rates on loans as well as declining home values, which means savings are not going as far.  

When combined with Boomers affect on the social security system, this poses increased problems, as more Boomers are going to have to rely on social security earlier in order to make ends meet during retirement.  This could also mean that spending will be down for this massive demographic.  All told, it’s not a rosy picture for a large percentage of Boomers, who need to think seriously about preparing for retirement on all fronts: saving money, investing, and paying down debt.  

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