The Average Baby Boomer Has a $1.2 Million Net Worth — See How You Stack Up
Written by
John Csiszar
Edited by
Amber Barkley
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Baby boomers are the post-World War II generation, a time that saw an unprecedented jump in the American birth rate. Boomers are now between ages 58 and 76, and all of them will be 65 or older by 2030.
According to a MagnifyMoney analysis of Federal Reserve data, the average baby boomer now has a median net worth of $206,700. However, the average net worth of baby boomers is considerably higher, at a whopping $1.2 million. These figures can vary so significantly because a small number of super-wealthy boomers likely pull up the average.
In any case, boomer net worth is significant — particularly in light of the fact that the average net worth for younger generations has actually fallen — from $103,400 to $100,800 over the past 20 years. The question is: How have baby boomers succeeded, do they have enough to retire, and how can future generations boost their net worths? Read on to learn more.
What Factors Contributed to This Net Worth?
Most baby boomers have built up a relatively significant net worth simply by being in the right place at the right time. The post-war economy in America boomed, propelling the country to the economic superpower status it holds today. Along the way, numerous factors contributed to financial gains for baby boomers, from falling tax rates to a generally rising stock market and steadily falling interest rates starting in the 1980s. With a few notable exceptions, housing prices were very affordable when boomers were buying, and they rose fairly consistently over those ensuing decades, in some cases reaching boom levels.
Baby boomers also benefited from the introduction of the 401(k) plan in the 1980s, giving workers a much easier way to save and invest while enjoying additional tax breaks along the way. All-in-all, this combination of factors served as the perfect storm for building wealth for the baby boomers willing to take advantage of them.
Is This Net Worth Sufficient?
Whether or not a $206,000 net worth — or a $1.2 million one — is sufficient for a happy retirement depends on a number of factors. Generally speaking, however, baby boomers are well prepared for retirement. In fact, their current net worth makes them the wealthiest generation on Earth.
However, bearing in mind that retirement can now often last 30 years or more, even those with a $206,000 net worth may have to pinch their pennies to outlive their income. Where a retiree lives, what their lifestyle is like, how long they will live and the size of their Social Security checks all play a big role as to whether or not their nest egg will be sufficient.
How Might Future Generations Benefit?
Future generations may ultimately benefit from the success of their baby boomer parents and grandparents, even if they’ve been struggling to amass a sizable net worth on their own. According to financial market intelligence firm Cerulli Associates, an incredible $84.4 trillion in assets will pass between generations by 2045, greatly affecting the millennial generation and beyond.
That transfer of wealth will enable younger generations to pay off student loans, save and invest, buy their own homes or travel, all factors that could also help the economy at large.
What Are Ways To Build Net Worth on Your Own?
Although the specific conditions that helped build baby boomer net worth are not the same now as they were decades ago, the savings and investment vehicles that boomers used are just as viable today. Here are some of the most important tools you may wish to employ:
401(k) Plan
The 401(k) plan is one of the greatest wealth-generation vehicles available to American workers. In addition to the tax benefits these plans offer, they have large contribution limits, and most employers match at least a portion of employee contributions. In the absence of a 401(k) plan, other tax-deferred options like IRAs are also a good choice.
The Stock Market
The stock market can seem volatile and frightening at times, but it’s been one of the greatest builders of wealth in American history. Although bear markets can drag prices down by 20% or more, the market as a whole has a long-term average return of about 10% annually.
In spite of its volatility, the stock market has never lost money over any 20-year rolling period, making it a worthwhile choice for long-term investors.
The Housing Market
Although the housing market has had a few historically wild periods — in 2008-2009 and 2020-2021, in particular — overall, it tends to consistently rise more or less in line with the rate of inflation. Over a long period of time, homeowners can build substantial net worth. In fact, according to the Federal Reserve, housing wealth is approximately one-half of the total household net worth of all Americans.
High-Rate Savings Accounts
You won’t build a considerable amount of wealth using a high-yield savings account, but with rates as high as they’ve been in decades, HYSAs make excellent options for places to park idle cash, such as your emergency fund or the down payment for your home.
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