15 Financial Facts About Baby Boomers That Will Shock You

By Emily Guy Birken, Wise Bread on 17 July 2018 0 comments
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15 Financial Facts About Baby Boomers That Will Shock You

The baby boom that lasted from 1946-1964 created the largest generation in American history (until the millennials came along 17 years later). At a population of just over 74 million as of 2016, this generation has shaped American culture, politics, and finances since birth.

Now, as boomers are reaching retirement age, their influence over the American economy is still strong. They make up 22.9 percent of the population of the United States. This means that the financial decisions and concerns of this generation still have an important impact on all of America's economy.

Here are 15 facts about baby boomers that may shock you.

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1. Boomers control 70 percent of America's disposable income

There are a couple of reasons for the boomers' control of 70 percent of disposable income in the U.S., as reported in the 2015 Baby Boomer Report by U.S. News. In part, it's because boomers who are still working are often at the top of their lifetime salaries, so they have more money to spend. Boomers have also had the time to accumulate wealth that they can spend, unlike Gen-Xers and millennials, who are in the midst of the most expensive years of their lives — with raising a family or just starting their careers, respectively.

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2. Their spending is expected to increase by 58 percent over the next 20 years

Spending by individuals in the 50+ demographic is expected to rise to $4.74 trillion over the next 20 years, which represents a 58 percent increase, according to AARP's Venture Capital Review in 2013. By comparison, the spending by Americans ages 25-50 is only expected to grow by 24 percent over the same timeframe. Considering the fact that advertisers seem to be chasing the millennial market (which is less likely to respond to traditional marketing), it seems that many brands are missing out by ignoring the enormous spending power of boomers.

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3. Boomers are brand-loyal

Baby boomers were the first generation that brands specifically marketed to, and it worked. As teenagers, boomers began creating their own subculture, and advertisers were quick to help form that subculture by building brand loyalty. Once boomers find a brand they like, they stick with it, from Levi's jeans to Coca Cola. Boomers are also loyal to Apple, as 41 percent of all Apple computers are purchased by boomers, according to research conducted by Nielsen and BoomAgers.

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4. They are responsible for 80 percent of all luxury travel

Members of the boomer generation want to see the world and experience new cultures, but they also want to feel pampered and "on vacation" when they travel. According to research conducted by Pew Internet and American Life Project, adults in the 50+ age demographic account for 80 percent of all spending on luxury travel. All told, boomers spend $120 billion per year on travel, according to a report from Skift.

See Wise Bread's guide to scoring free luxury travel with credit cards.

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5. They buy more new cars than other generations

Historically, the age of most car buyers was in the 35-44 age range. That was because people in that age group were just hitting their peak income levels and were often buying new cars for the first time. However, the peak age of car buyers has now shifted to the 55-64 age demographic, according to a study by the University of Michigan’s Transportation Research Institute. This is in part because boomers have more disposable income to spend on vehicles than Gen-Xers and older millennials. But it's also because boomers are generally more interested in purchasing good quality, which means they are more likely to buy cars that are brand new.

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6. They hold 80 percent of all money in savings and loan associations

As anyone who has seen It's a Wonderful Life knows, a savings and loan (or in the case of the Capra classic, the Bailey Building and Loan) is an independent financial institution that's similar to a bank, but specializes in helping people get residential mortgages. Boomers, in particular, truly love their savings and loan associations, and hold 80 percent of all money in these institutions, according to research conducted by The Healthcare Marketer.

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7. They earn 47 percent of all income in America

Despite only making up 22.9 percent of the population, baby boomers earn a whopping 47 percent of all income in the United States, according to data provided by Truaxis. However, the average annual household income for boomers is only $53,000 — so how do boomers manage to earn so much in aggregate? Part of the reason for the large portion of income they receive is the fact that boomers make up a large percentage of the highest-paying jobs. For instance, 70 percent of law firm partners are boomers.

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8. Business owners are twice as likely to be boomers than millennials

The millennial generation has a reputation for being entrepreneurial, but, in fact, the boomers are more likely to start their own businesses. In part, this is because 83 percent of boomer business owners had the financial cushion available to start a new entrepreneurial enterprise as a lifestyle choice, rather than as a financial necessity, according to a 2015 Gallup report. This might be the end result of boomers' job stability over the pan of their careers. After spending several decades in a traditional, well-paying job, many boomers may be starting businesses as a fun second act, using money they've saved as capital.

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9. Nearly two-thirds of boomers expect to work past 65

As with every other phase of their lives, boomers are redefining retirement, with 65 percent of the generation planning to work past the conventional retirement age of 65, according to The Motley Fool.

There are a number of reasons boomers are planning to work past their 65th birthdays. To start, life expectancy for the boomer generation is pretty darn good, and much better than that of their parents' generation. An age that was considered old just a generation ago is still the prime of life for boomers. In addition, working past 65 has a practical side to it. The longer you work, the easier it is to ensure you have enough money for retirement, no matter how long that retirement may last. Since boomers generally do not have the access to pensions their parents had, they need to fund their own retirements.

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10. Boomers have not saved enough for retirement

According to a 2017 Transamerica survey, baby boomers have saved a median of $164,000 for retirement. While that's not an amount to sneeze at, it's still hardly enough for a comfortable retirement. Conventional wisdom states that you can afford to withdraw no more than 4 percent of your retirement savings annually to avoid outliving your money, which would give boomers with a $164,000 nest egg a total of $6,560 per year to live on.

In addition, the $164,000 figure is the median savings. About one in five baby boomers has less than $50,000 saved, and more than one in 10 has less than $10,000 saved.

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11. They do not discuss finances with family

While boomers have embraced a number of the social and technological changes that have come with time, in general, they are still pretty tight-lipped about money. Transamerica found that only 9 percent of baby boomers frequently discuss finances with those who are close to them. This reflects the prevailing attitudes of Americans when boomers were young. It used to be considered vulgar to talk about money, and many boomers have taken that to heart, even when the culture has made it more acceptable to discuss finances. But not discussing finances can cause problems, especially when families do not have the information they need to make the best money choices.

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12. Boomers are due to inherit $15 trillion over the next 20 years

An enormous amount of generational wealth will make its way to boomers' hands in the next two decades. According to research by Nielsen, boomers stand to inherit $15 trillion over that time. But unfortunately for their Gen-X and millennial children and grandchildren, boomers intend to enjoy themselves with their inheritances, rather than leave a legacy for their offspring. In a survey by investment firm U.S. Trust, only 49 percent of millionaire boomers consider it a priority to leave money to their kids — meaning more than half do not.

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13. They are helping to support their adult children

It's possible that their reluctance to pass on inherited wealth to their children stems from the fact that 59 percent of boomers are financially supporting their adult children, ages 18-39, according to an online poll by Forbes Woman and the National Endowment for Financial Education (NEFE). That kind of monetary support has been necessary because of the unprecedented financial pressures facing young adults coming of age after the Great Recession. Though boomer parents are generous in providing help to their adult children when they have trouble finding a job, the financial strain could be prompting boomers to decide to enjoy their wealth in retirement without worrying about leaving an inheritance.

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14. They make up over 41 percent of consumer spending

Considering the amount of disposable income under boomer control, it should not be surprising to learn that boomers are a powerful consumer group in this country. In the first quarter of 2017, Americans 55 and over accounted for 41.6 percent of consumer spending, according to government and Moody's data. They also dominate in sales in a whopping 94 percent of consumer packaged goods categories, Nielsen notes, making them a generation not to be underestimated when it comes to their buying power.

However, advertisers often seem to ignore this huge consumer demographic, and instead focus on attracting new, younger customers.

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15. Boomers spend 27 hours a week on the internet

Millennials are known as "digital natives" since they grew up with the internet and feel very comfortable with technology and all of its quirks. However, boomers actually know their way around a social media platform or an online retailer, despite the stereotype that they would need to call tech support to open a new tab on their browser. According to a 2013 study from Pew Research Center, Boomers spend an average of 27 hours per week on the internet, which is two hours more than people between the ages of 16 and 34.

This article by Emily Guy Birken was originally published on Wise Bread.