Baby boomers are regarded as hard-working individuals who value relationships and positivity above all else. There are 73.4 million baby boomers in the U.S. that are close to or already in their retirement years. Baby boomers were the largest generational group up until the era of millennials. This makes them an important generation to keep an eye on thanks to both their sheer size and buying power.
This generation carries some high expectations for their retirement including things like exotic trips and new experiences. However, some Boomers have put these dreams on hold because of various financial issues. Some are still in the workforce while others struggle to pay crucial expenses like medical and housing bills. A few contributing factors include failed investments during the Great Recession and living longer, making retirement costly for today’s retirees.
Despite this, marketers and economists alike should pay attention to the nuances of their financial lives to know how to support one of our country’s most influential generations.
Baby Boomer Spending Power
Baby boomers hold $2.6 trillion in buying power. They’re credited as one of the wealthiest generations to date and are still economically powerful despite their old age. Boomers have had more time to build their wealth in comparison to other generations while some are still in the workforce and making more money. However, their continued accumulation of wealth is stifled by things like workplace discrimination, poor investments and debt. Below are a few things that illustrate their spending power.
- Baby boomers have $2.6 trillion in buying power. (Source: FONA)
- 64 percent of Boomer women are expected to participate in the workforce by 2022. (Source: Visa)
- Baby boomers made up 25 percent of the U.S. labor force in 2017. (Source: Pew Research Center)
- The average career gap before baby boomers go back to work is 2.5 years. (Source: Kelly)
- 25 percent of workers between the ages of 60 and 74 say they haven’t been hired due to age-related issues. (Source: Kelly)
- 64 percent workers between the ages of 45 and 74 have seen or experienced age discrimination in their workplaces. (Source: Kelly)
- Boomer gig workers make $43,600 a year on average while working 25 hours a week. (Source: AARP)
- 32 percent of baby boomers would choose freelancing flexibility over a traditional 9-to-5. (Source: TD Ameritrade)
Baby Boomer Spending Habits
Baby boomer spending habits reflect their values and priorities at this point in their life. Their old age also influences their interest in things like healthy food options to make sure they live active lifestyles.
Baby boomers are savvier than you may think when it comes to online shopping. Some experts believe that their extended time in the workforce is a contributing factor to their migration to online shopping and card-not-present (CNP) transactions. Some other reasons why baby boomers migrate to online shopping include convenience and availability. See below for more Baby boomer online shopping habits.
- 67 percent of baby boomers own a smartphone. (Source: Pew Research Center)
- CNP transactions make up 40 percent of credit spending on Visa for consumers ages 60 to 69. (Source: Visa)
- 27 percent of baby boomers have ordered groceries online for home delivery. (Source: Statista)
- 46 percent of baby boomers rely on Cyber Monday for their holiday shopping. (Source: Deloitte)
- 41 percent of baby boomers use digital coupons while they’re grocery shopping in stores. (Source: AARP)
- 53 percent of baby boomers prefer shopping online over physical stores. (Source: Deloitte)
Baby boomers value family and gleefully invest in things that benefit their households. Their interest in snack foods, on the other hand, is driven by their desire to prepare big meals when they have company. Baby boomers also love pets, especially when coping with empty nest syndrome and are willing to foot the bill to keep their fur babies happy.
- Baby boomers make up 46.8 percent of pet spending. (Source: Pet Age)
- Boomers are expected to spend 3.4 percent more on health-related purchases than their parents did. (Source: FONA)
- 59 percent of Boomers were willing to pay extra for socially compliant, sustainable products. (Source: Deloitte)
- 49 percent of baby boomers are interested in functional foods like probiotics and vitamins. (Source: FONA)
- 72 percent of baby boomers read food and beverage labels to know if the product is healthy. (Source: FONA)
- 20 percent of baby boomers eat ready-to-eat snack food like fruit, candy bars and nuts. (Source: FONA)
Retirement and Healthcare Spending
Retirement planning is crucial to start well before your retirement years. Unfortunately, one-third of seniors regret not saving enough and spending too much in their younger years. These regrets are reflected in some of the issues this generation faces with retirement and all of the expenses that come with it, including healthcare.
Mid-Boomers (those born in the middle of the generation, roughly between 1952 and 1958) realize that they’re not financially prepared for retirement and scramble to see how they can fund it. Below are a few stats that illustrate their expectations and struggles.
- 69 percent of baby boomers either expect to or are already working past age 65 or don’t plan to retire. (Source: TCRS)
- Baby boomers expect to take 4 to 5 leisure trips in 2019. (Source: AARP)
- Baby boomers plan on spending more than $6,600 alone on travel in 2019. (Source: AARP)
- Only 26 percent of baby boomers have a backup plan for retirement if they’re forced into retirement sooner than they thought. (Source: TCRS)
- Baby boomers put between 9 percent to 10 percent of their pay towards their retirement. (Source: Stanford)
- Only 55 percent of Boomers have any money saved for retirement. (Source: Insured Retirement Institute)
- More than 4 in 10 baby boomers inaccurately believe Medicare will cover long-term costs of healthcare. (Source: Insured Retirement Institute)
Baby Boomers and Debt
The housing bubble burst in the late 2000s took a major hit on baby boomers. Prior to that, Boomers were already facing issues with lack of savings and high amounts of debt. Being unprepared for retirement and having a lack of funds to pay off debts forced many in this generation to continue working. They continue in hopes of paying down debt and building up whatever they can for their retirement.
- Of those households with debt, baby boomers held an average debt level over $110,000. (Source: Stanford)
- 15 percent of mid-boomers had debt exceeding half of their wealth. (Source: Stanford)
- 12 percent of baby boomers have a student loan either for themselves or for someone else. (Source: AARP)
- 33 percent of baby boomers say student loan debt has prevented them from buying a car. (Source: AARP)
- Baby boomers had a national average student loan debt of $33,812 in Q4 of 2018. (Source: Experian)
- The national average amount of credit card debt for baby boomers was $7,041 in Q4 of 2018. (Source: Experian)
Planning for retirement is difficult when you still have debt and other financial hardships trailing behind you. It’s even more strenuous when you become a credit score victim when things like identity theft or medical bill mishaps occur. Whether your identity was stolen or you’re simply weighed down by a poor credit score, Lexington Law can help you navigate different issues regarding your credit score and credit report to make sure everything is fairly reported.