As Boomers draw close to retirement age, there is much public criticism about Boomer spending habits. Many of the young whiz kids in the financial advice industry point to the Baby Boomers as a negative example. The media are full of headlines about their failure to prepare adequately for retirement. Generations X and Y often excoriate that generation, calling them frivolous and selfish, spoiled pleasure chasers that left a ruined financial system in their wake. There may be some truth in that, but to apply it to the entire generation is unfair.
The Sandwich Generation
While certainly, there are Boomers who threw solid financial advice out the proverbial window, bought more house than they could afford and traveled the world instead of saving for retirement, but that does not describe all of them. In fact, many struggle to save for retirement because they are sandwiched between taking care of aging parents and helping their adult children.
They have little time for navel gazing and few resources for spendthrift hedonism. That’s because they worked hard, paid off their homes, put their children through school, and put their faith in the 401(k) plans offered in place of fixed-benefit plans. Unfortunately, their faith was ill-placed. The crash of 2008 really hurt many plans of that type, and people are scrambling to restore what they’ve lost in time for retirement.
Sparkle and Glitter Catches the Eye
The Boomer generation’s luxury market, high-end spending is always good for a pointing and head shaking sort of story. That is, of course, until what has become a service-oriented economy – fully 70 percent of it relying on consumer spending – slows down. When the pundits offer financial advice then, it is all about how spending is the only way to pull the country out of its current economic struggles. All of this conveniently ignores basic facts.
Luxury is done primarily by a small percentage of the wealthiest Boomers. Most of the Boomers live in the same fiscal world we do, and their spending habits reflect that. Boomers struggle to afford the skyrocketing costs of health care, fuel, food and are trying to get out of debt, just like anybody else.
Caught in an Economy Shift
During the lifetime of the Boomers, the whole economy has changed. Calculated in real dollars, adjusted for inflation, spending power has not increased in decades. Credit drove the economy, because it was via credit that people were able to buy the volume of consumer goods necessary to keep the economy moving, once the manufacturing jobs went overseas.
Without manufacturing, well-paying jobs available without a college education were greatly reduced in number. Boomers took on a lot more student debt than generations past. It should also be considered that, during their lifetime, what once took a single wage earner to accomplish, now takes two. Yet, with the high divorce rate, often there is only one working twice as hard.
What You Can Learn from the Media Crafted Boomer
The best financial advice is the classic money wisdom, before the government and the economy needed well-trained consumers to keep things moving. In those days, thrift and delaying the gratification of personal pleasures until after security was achieved were traits that were encouraged and valued. Place your trust in your own efforts and tangible results. Don’t have faith that the government is going to fix the economy or that Social Security will be there for you. Be responsible for your own financial needs throughout your life, including retirement, and you’ll fare well.
Jeffery Sterner blogs for America’s Debt Help Organization—Debt.org, and educates Americans how they can live debt free lives in our day and age.
***Photo thanks to grantlairdjr & Tax Credits***