Baby boomers’ money troubles: Worse than we thought
By Bruce Watson
2 May 2012 Over 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. […]
