Baby Boomers Say They’re Worse Off Financially Now Than 4 Years Ago – Here’s Why
Written by
Crystal Mayer
Edited by
Amen Oyiboke
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According to a recent Redfin survey, baby boomers report being worse off financially than they were four years ago. The news contrasts with other generations, which report a more favorable outlook.
Nearly 70% of millennial and Gen Z homeowners, for example, say they are better off financially compared to four years ago.
Here’s why boomers may feel they aren’t doing as well as they were in 2020.
Generational Financial Outlook
When surveyed, financial outlooks differed significantly by generation.
Millennial and Gen Z homeowners overwhelmingly said they were better off than four years ago. These young adults were likely aided by a thriving housing market that drove steep increases in home values. Even renters in the two younger generations felt better off, with 52% reporting a favorable outlook.
On the other hand, baby boomers ages 60 to 65 were significantly less optimistic.
Among this group, 40% of renters and 38% of homeowners said they were worse off than four years ago. While most other generations saw financial outlooks vary based on whether respondents owned or rented their homes, boomers expressed dissatisfaction across the board.
Why Baby Boomers Feel Worse Off
Boomer discontentment is likely multifaceted, but several factors may have contributed to their responses.
As Redfin Economics Research Lead Chen Zhao noted, many boomers may be living on a fixed income. Without an increase in income, factors such as inflation, rising healthcare costs, and market instability can significantly affect financial security.
Inflation
People on fixed incomes may be especially vulnerable to inflation. The inflation rate in 2020 was about 1.2%, but it skyrocketed to 8% in 2022. While inflation has since cooled, the price of consumer goods remains significantly higher, disproportionately affecting retirees and others living on tight budgets.
Healthcare Costs
Another potential reason for boomers’ unfavorable financial outlook is rising healthcare costs. According to the Kaiser Family Foundation, out-of-pocket healthcare expenses have climbed to an average of $1,425 per person.
Even though more people are insured nationwide and providers cover a larger share of costs, healthcare remains unaffordable for many.
Retirees, in particular, may need to dip into savings to cover expenses for treatments such as chemotherapy and insulin. Rising costs are driven by factors including an aging population and an increase in chronic conditions.
Market Instability
Compared to their younger counterparts, boomers may also be more affected by market fluctuations. Retirees or those nearing retirement may see their nest eggs depleted by stock market volatility, with little time to recover losses.
Concerned boomers should meet with a financial advisor to discuss risk tolerance and vulnerability.
On the bright side, many boomer homeowners have significant equity in their properties, which could help offset hits to their retirement funds. As they downsize, they may have an untapped financial cushion.
Younger generations, however, continue to face unprecedented obstacles to entering the housing market.
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