Baby boomers, often heralded as the wealthiest generation in American history, have reaped the benefits of the post-World War II economic boom. This era allowed them to purchase homes and secure high-paying jobs, often without the burden of student loan debt. As a result, they were well-positioned to accumulate wealth over their lifetimes, with expectations of passing on a considerable inheritance to future generations. However, does this perceived wealth translate into significant savings in their bank accounts? The reality might surprise you.
The Current State of Baby Boomer Savings
Despite their status as a financially fortunate generation, many baby boomers find themselves with surprisingly modest bank account balances. A recent survey by GOBankingRates reveals a stark picture: a significant portion of both younger boomers (ages 60 to 64) and older boomers (ages 65 to 78) report having $100 or less in their savings accounts—41% and 33% respectively. On the flip side, there is a segment of this generation that maintains a much more robust financial standing, with 20% of younger boomers and 18% of older boomers having $10,000 or more saved. This disparity underscores a significant wealth gap within the generation.
Detailed Breakdown of Savings Among Baby Boomers
The distribution of savings among baby boomers varies widely, indicating diverse financial health within the generation:
- Younger Baby Boomers (Ages 60 to 64) Savings Distribution:
- $100 or less: 41%
- $101 to $500: 10%
- $501 to $1,000: 11%
- $1,001 to $2,000: 5%
- $2,001 to $5,000: 7%
- $5,001 to $10,000: 5%
- $10,000 or more: 20%
- Older Baby Boomers (Ages 65 to 78) Savings Distribution:
- $100 or less: 33%
- $101 to $500: 16%
- $501 to $1,000: 5%
- $1,001 to $2,000: 10%
- $2,001 to $5,000: 9%
- $5,001 to $10,000: 9%
- $10,000 or more: 18%
How Much Should Boomers Have Saved?
The traditional financial wisdom suggests having three to six months of living expenses saved in an emergency fund. This fund is intended to bridge the gap between jobs for those still in the workforce, with the expectation that it will be replenished once employment resumes. However, for many boomers who are either retired or nearing retirement, this guideline shifts. Since they are no longer earning a regular income, financial experts recommend maintaining a higher balance to cover unexpected expenses without resorting to high-interest credit options.
Rob Burnette, CEO and investment advisor at Outlook Financial Center, advises, “It’s not uncommon to see [baby boomers] with anywhere from six to 12 months’ worth of expenses in their savings account. Its purpose is to be there when you need it, so you don’t have to put an emergency expense on a credit card at a 20%-plus interest rate.”
Conclusion: A Complex Financial Picture
The financial landscape for baby boomers is complex and varied. While some have successfully capitalized on the economic prosperity of their youth, others face retirement with minimal savings, exposing them to financial vulnerabilities. As this generation continues to age, the focus on adequate savings and financial planning becomes increasingly crucial. For baby boomers, understanding the importance of a well-funded savings account is essential for maintaining financial security and independence in their golden years.