As the oldest working generation, baby boomers have one foot in the workforce and the other in retirement. Favorable times and economic conditions make it easier for this generation to build wealth compared to younger generations.
The 2022 study projects that the wealth transferred through 2045 will be $84.4 trillion – $72.6 trillion of assets will be transferred to beneficiaries, while $11.9 trillion will be donated to charity. More than $53 trillion will be transferred from households in the Baby Boomer generation, representing 63% of all transfers.
Average net worth for baby boomers
Baby boomers are the generation of workers born between 1946 and 1964. The oldest members of this generation are in their mid-70s, reaching retirement age. The youngest members are still a few years out of the workforce altogether.
Members of this generation have an average net worth between $200,000 and $255,000, according to the Federal Reserve’s 2019 Survey of Consumer Finances. The average net worth is estimated to be between $970,000 and $1.2 million.
How does the average baby boomer’s worth compare to other generations?
The average net worth of baby boomers is higher than any other generation. The average net worth of Gen Zers is $76,000. The average Millennial over the age of 35 makes more than $400,000. Generation X has an average net worth between $400,000 and $833,000, and older generations including Baby Boomers and the Silent Generation have an average net worth that creeps into the millions.
What shapes the net worth and financial future of the boomer generation
Several factors have played a role in this generation’s ability to build and increase their net worth. Boomers have benefited from a combination of time, societal norms, and stronger economic conditions compared to younger generations.
Certain societal norms make it easier for boomers to increase their net worth
Compared to younger generations, boomers are more likely to marry and marry at a younger age. According to Pew Research, only 44% of Millennials are married in 2019, compared to 53% of Gen Xers, 61% of Boomers and 81% of Silents at the same age.
“With Boomers, when they get married young there are often two earners in the household so the net worth increases. Millennials often live on one salary because they can’t marry young or marry at all,” said Molly Ward, Financial Professional with Equitable Advisors based in Houston Texas.
Baby boomers have time on their side
As the oldest working generation, boomers have more time to build wealth and recover from the economic downturn they faced. And it has paid off. Census data shows that baby boomers are nearly nine times wealthier than millennials.
“Monthly retirement benefit payments along with monthly social security payments for retirees of that generation provide predictability for spending during retirement years when home equity and stock market portfolios may not be settled and continue to increase over the years,” said Ward. “However, high interest rates are a reality when boomers build wealth. While interest rates have risen recently, that generation is seeing higher growth than Gen X and Millennials.
Boomers are benefiting from the affordable housing market
Home ownership is said to be a key step in building lasting wealth and baby boomers can reach this financial milestone earlier than younger generations. According to the Berkley Economic Review, 45% of baby boomers can buy their first home between the ages of 25 and 34, compared to only 37% of millennials between the ages of 25 and 34 who own their own home.
3 ways baby boomers can grow and protect their net worth
While baby boomers’ path to building wealth has taken a different trajectory compared to other generations, there is still a way for boomers to continue to increase their net worth in recent years.
- Pay off any outstanding debt. Your net worth is the value of what you own, minus your debts. Eliminating debt in the years before retirement and starting to live off your retirement income is key to not only protecting your net worth as you age, but also helping you avoid putting your retirement savings down and having to live on less.
- Max out your retirement account. If you are not yet retired, make it a priority to contribute the maximum amount to your retirement savings account. By the time you reach your 60s, you need to save at least 8 times your salary if you hope to retire comfortably and maintain your lifestyle. Some retirees choose to live more frugally in their later years, but it’s unpredictable when you’ll have high health costs or unexpected expenses. Saving more than you think is key to ensuring you don’t end up in debt in your later years and lower your net worth.
- Make it after retirement budget. Think carefully about the income you will have available in your later years and how you will spend that money to see you through your golden years. “In the 70s and older, the focus usually shifted to budgeting and portfolio withdrawals. Retirees could withdraw a certain amount of money each month or withdraw a percentage of their portfolio balance each month,” said Paul Deer, CFP and Vice President, Advisory Services at Personal Capital. “With the first strategy, the amount of income is more predictable, which makes budgeting easier. But you generally have more control over your portfolio’s drawdown and potential longevity with the percentage method.