5 Baby Boomer Money Mistakes That Millennials Are Repeating — and How To Fix Them

The “Baby Boomer Generation” refers to people born after the Second World War and before 1964. Millennials, also known as digital natives, were born between 1981 and 1996 and have lived substantively different lives than baby boomers. The former group is known for being hardworking and practical, and the latter is often hailed as tech-savvy and innovative. 

Though baby boomers and millennials may seem worlds apart, they share a few things in common, like their poor financial habits. Here are five baby boomer money mistakes that millennials may be repeating and how to fix them. 

Waiting Too Long To Save for Retirement

Stephen Kates, CFP and expert reviewer for Annuity.org, believes that the No. 1 money mistake millennials are repeating from the baby boomer generation is waiting too long to save for retirement.

“Adequately saving for retirement doesn’t require substantial sums if investors begin early enough and take advantage of their saving options correctly,” Kates said. “Starting in your mid-20s with a little at a time will dwarf starting with a lot in your 40s and cause you substantially less stress along the way.” 

So, if you’re in your 20s or 30s and have not started building your nest egg, it’s time to begin. Allocate a portion of your monthly income into a retirement account and let compounding work its magic by earning interest on both the money you’ve saved and the interest you earn. Use a compound interest calculator to see how much your savings can grow using the power of compound interest. 

Investing for Everyone

Not Having Enough in Emergency Funds

Life comes at you fast, which is why saving for a rainy day should always be a priority. Unfortunately, some millennials are making the same mistakes as their baby boomer counterparts by neglecting to save for emergencies.

Recent data from the Insured Retirement Institute found that about 45% of baby boomers surveyed have no savings whatsoever. Equally as concerning, a survey by the Consumer Financial Protection Bureau found that 42% of people younger than 35, including millennials, have less than one month’s worth of emergency funds stacked away. 

“An emergency fund for the last 15 years may have seemed like a liability due to low interest rates,” Kates said, “but it’s one of the most important asset and lifestyle protection vehicles you can have.”

With many online banks offering competitive interest rates for their high-yield savings accounts, stashing your emergency fund away in one of these accounts can earn you returns as high as 5% APY.

“When a large, unexpected cost comes up,” Kates said, “having a cushion to shield your finances will save you from running up debt or having to skip necessary bills.” 

Going All In on the Hot New Investments

The fear of missing out, known as FOMO, is a psychological phenomenon affecting all generations of investors. Whether you’re a baby boomer or millennial, it’s easy to get caught up in the rush of new trends and exciting investments. But, as Kates reminds us, not every rise in the market is sustainable.

Investing for Everyone

“The boom and bust in the late ’90s, early 2000s is burned into the memories of many baby boomers,” Kates said. “Some millennials and Gen Z have recently weathered a similar crash in tech stocks and alternative investments like cryptocurrencies.”

He warns that while some companies may strike it rich, some might never recover or will pivot to the next buzzword trend like AI, leaving investors empty-handed. 

Instead of chasing after the next big thing, Kates advises investors to be discerning and avoid investments they don’t understand or can justify only through hype and promotion. So, before investing your hard-earned money into a hot new investment, perform your due diligence by looking at the stock’s price-earnings ratio and reading the company’s most recent annual report, quarterly earnings reports, press releases, etc.

Prioritizing College Savings Over Retirement Savings

Many baby boomers made the mistake of prioritizing college savings over their own retirement savings, leaving them with little to no retirement savings today. Unfortunately, millennials are repeating this error. It’s understandable to want to put your children’s future before yours, but you must secure your own oxygen mask before helping everyone around you. 

“College costs are growing rapidly year over year and, as tempting as it can be to offer your children a debt-free future by prioritizing their college tuition, it could come at the cost of your retirement future,” Kates said. “After all, loans exist for college, but they do not for retirement.” 

So, be sure to strike a balance between saving for your children’s college tuition and saving for your future. By creating a solid retirement plan early on, you can ensure you’re not left struggling financially in your golden years and relying on your children for financial support. Consider consulting a certified financial planner to help balance your retirement savings priorities. 

Investing for Everyone

Making Investments Overly Complex

As baby boomers reach retirement age, they’re realizing the importance of simplifying their finances to keep better track of their investments. However, many millennials may be unknowingly repeating the same money mistakes as their baby boomer parents by making their investments overly complex. 

Joe Buhrmann, CFP and senior financial planning consultant at Fidelity’s eMoney advisor, said, “While many investors may view having multiple plans with multiple types of investments as diversification, a more thorough analysis might lead you to the conclusion that you’ve purchased similar investments multiple times in various plans.”

If you think you may have been over-diversifying your investment accounts, Burhmann suggests working with a trusted financial advisor to conduct an analysis of your investment portfolio and determine whether it’s aligned with your tolerance for risk, positioned for market conditions and structured to provide the necessary retirement income you’ll need.

Remember, never put all your eggs in one basket when investing. Also ensure you’re not just purchasing similar investments multiple times in different plans or have too many investments to manage effectively.

Leave Poor Money Habits in the Past

While the work ethic, persistence and humbleness are all admirable traits that should be passed down from the baby boomer generation, their financial mistakes are not. By recognizing your own bad money habits and correcting them, you can break the cycle and set better examples for future generations. 

More From GOBankingRates

Investing for Everyone


See Today's Best
Banking Offers