Financial Surprises for Baby Boomers

  by Tyler Curtis

by Shelley Seagler

Last month, the National Center for Policy Analysis published a new report, How Are Baby Boomers Spending Their Money?

Among the key findings, the report reminded us that baby boomers are nowhere near ready for retirement.  While there are many causes for this lack of preparedness, a primary cause seem to be that boomers were not ready for the shift away from the pensions their parents had relied on to being responsible for funding their own retirement.  Moreover, Americans of all ages are simply not saving enough.

The report analyzed several key areas of boomer spending:


For several decades, the cost of college education has grown faster than income.  So it should be no surprise that one third of student loan debt is currently held by people over the age of forty.  As you might expect, many boomers offer financial assistance to their college-aged kids.  However, there are those that are also in debt from efforts to further their own education.

Helping Adult Children

A staggering fifty-nine percent of parents are providing financial support to adult children who are no longer in school.  Parents are helping with living expenses, transportation costs, spending money, medical bills, and paying back loans. A separate survey reports that two out five have paid off debt for their children.

Mortgage Debt

Typically, housing is the largest monthly consumer expense.  Home mortgages equal almost three-quarters of all consumer debt.  Three-fourths of the households of workers who are middle-aged and older have mortgages.

An additional factor is that home prices began falling dramatically by the end of 2008, leaving many people underwater, owing more on their mortgages than their homes were worth.

Entertainment and Frills

Here’s the good news.  Over the past twenty years, spending on  food, clothing, home furnishing and transportation (car purchases, maintenance, gas, public transportation) has declined.

Income Levels

A blow for many boomers is that decline in income over the past couple of decades. In 1990, the real median income for those ages 45-54 was $67,795 (in 2010 dollars).  In 2010, it was $62,485.  Those ages 55-64 have see no real growth either.  For this age group, the real median income in 1990 was $52,340 and although that number peaked in 2007 at $60,345 and declined to $56,575 in 2010.

Credit Card Debt

While spending on certain extras went down over the past few decades, credit card debt has dramatically increased.  From 1989 to 2007 average annual credit card balance more than doubled for those age 45 – 54 and those 55-64.

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