Baby Boomers' Money Troubles: They're Worse Than We Thought

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Baby BoomersOver the past few years, high unemployment, the housing market implosion and falling wages have driven many American families closer together -- both financially and literally. Parents are supporting their adult children, children are supporting parents, and generations are helping each other to weather the economic storms.

In some ways, that's heartwarming, but according to a recent study, the rising trend of inter-generational support has hit baby boomers particularly hard. They're caught between financially-strapped elderly parents who can no longer work, and adult children who can't find work.

In 2007, Ameriprise, a leading financial services company, conducted a cross-generational survey of economic perceptions: Money Across Generations. Late last year, it followed up with Money Across Generations II. Taken together, the two surveys reveal a great deal about how perceptions of wealth have changed in the four years since the Great Recession reshaped America's economic landscape.

According to Ameriprise, five years ago, 44% of baby boomers claimed that they were "trying to grow their savings." Today, that number has almost been cut in half: Only 24% of boomers are putting money aside for their old age. The same percentage are "simply trying to maintain what they have."

Even that modest goal has become rather difficult. On paper, boomers should occupy a sweet spot in America's economic structure. Well-established in their professions, they should be protected from low-level layoffs, yet should be young enough not to be suffering from heavy health care expenses.



The reality is much more complex. Many boomers lost their jobs in the massive layoffs of 2008 and 2009, and even those who didn't have been impacted by family members' financial woes. On one end of the spectrum, most boomers have stepped in to help their parents deal with money issues, often linked to health care costs. According to Money Across Generations II, 58% of boomers claim to have financially assisted their elderly parents: 22% reported that they've helped their parents purchase groceries, 15% have helped pay for medical bills, and 14% have helped out with utility bills.

On the other side, the majority of boomers have also been providing a financial lifeline for their offspring. More than half of boomer survey respondents have let their kids move back home and live rent free, and 93% have given their children some form of financial support.


All of this cross-generational support has come with a significant economic and emotional cost. One in 10 boomers surveyed claimed that helping their parents has "slowed down" their retirement savings; when it comes to their adult children, 34% say the same. And, as boomers have increasingly helped their families through the economic downturn, their perceptions of their own economic viability have slipped. In 2007, 51% of boomers reported being "very confident" of their ability to assure a "financially secure life" for themselves and their children. By 2011, that number had fallen to 33%. When it comes to their ability to care for their parents, boomer perceptions have had a similar downturn: In 2007, 33% were very confident of their ability to secure a financially secure life for their parents. Four years later, that number had dwindled to 19%.

For boomers, the recession could have devastating long-term effects. As the economy picks up, younger workers will likely find work, and many will be able to get their savings and retirement plans back on track. Their boomer parents, though, many of whom are on the final approach to retirement, may find that supporting parents and children has halted their retirement planning, depleted their savings accounts, or both. Cash-strapped thanks to their generosity, they may find themselves delaying retirement, and when they do stop working, their golden years may be a bit more tarnished.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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MIKEY'S SCREEN

It's amazing! I made the effort to work for 25 years in the military, retiring at age 42. Upon retirement, I took off a year and then went to work for my county as a welfare worker in Foster Care. Needless to say, I retired again after 20 years at age 65 and, with my military retirement plus my combat disability pay, Social Security Retirement and my county retirement; I am making more take home pay now than I did when employed. Also, my wife will retire next year and, being over 55 years, will also draw not only her current retirement from the welfare agency, but also her retirement from her previous job with the federal government, plus her social security retirement. It all depends on how you stayed employed making the sacrifices and commitments along the way. Next year, we will rent out our house for several years, pack up the motorhome, and see this great country of ours and visit our four children and nine grandchildren. Too bad there are so many out there that let their own selfish "me first" attitude cloud their judgment for when they would retire. Most people can't think down the road when they should be looking at the next chapter in their lives

May 17 2012 at 5:44 AM Report abuse rate up rate down Reply
jjaykamp

Amazing how little the people on this blog know about anything economic. You are all rabbits caught in a trap that you don't understand. You will continue to support people that will starve you.

May 17 2012 at 4:34 AM Report abuse -1 rate up rate down Reply
John

No crap sherlock the Boomers are they most screwed over generation in history. We were sent to die in Vietnam because we didnt toe the god and country stepford children mold the so called "greatest generation" tried forcing us in. Then they taxed us to death to support thier wasteful life style and now expect us to take total care of them in thier old age leaving our generation with nothing to show for decades of hard work. Now the younger administration expects us to "pay our share" I ask haven't we paid enough over the last 60 years?

May 17 2012 at 1:37 AM Report abuse -1 rate up rate down Reply
JoanneVLavender

In the last four years, I have lost over half the value of my stock portfolio--twice. My house has lost $350,000 of its value. Now the State of CA wants to take away the pension fund into which I have paid for over thirty years. I cannot afford to retire...and I am supporting one of my adult children and her fiance, whose jobs TOGETHER won't pay the rental of an apartment in any decent neighborhood.

May 17 2012 at 1:31 AM Report abuse rate up rate down Reply
pinelcare

I do agree that we are on the verge of a civil war, when people have no other choice , no other optin and nothing more to loose. Wait and see...

May 16 2012 at 10:53 PM Report abuse +1 rate up rate down Reply
bettyverret

under the previous administration I was saving about $1000 a month, under this one I am lucky to not have to dip into my savings every month, everything has doubled in price

May 16 2012 at 10:37 PM Report abuse -1 rate up rate down Reply
DAVID LEAVELL

I liked the gloom and doom article this is getting to be normal as we head into the third world status, the only upbeat is when the rich are doing better at beating us down more, then we're backed into a corner.

May 16 2012 at 9:41 PM Report abuse rate up rate down Reply
cupidpsychemom

Already read the retort from October 2011. Really, Gen X is sick of your B.S.
http://www.emptyage.com/post/11591863916/generation-x-doesnt-want-to-hear-it

May 16 2012 at 9:01 PM Report abuse -1 rate up rate down Reply
ajt1025

The people always get screwed by our currupt politicians in our State House and in Washington. The stole our money and have no way of paying it back. Well the will tax us to death to pay down the massive debt they put upon us and our great coutnry. It saddens me that WE THE PEOPLE can do nothing about it because the lawyers make the laws but they exculde themsleves from them. I thought thatthey were Americans too, guess I am wrong, they are nothing more then currupt self serving corp and party bought and don't feel they owe us anything but to pay the bills and be quite.

May 16 2012 at 8:54 PM Report abuse +6 rate up rate down Reply
Ronald Malozi

Welcome to the new Depression. There wasn't ever a so-called Recovery. It's all a facade to brainwash the masses that it really happened. All a bunch of lies as usual.

May 16 2012 at 8:45 PM Report abuse +6 rate up rate down Reply