Today, Mark has the financial responsibility of taking care of an elderly family member’s budget, in addition to his and Mary’s, since the woman’s income decreased as a result of her husband’s death. In this role, Mark pays particularly close attention to the family member’s home expenses, planning and budgeting for anticipated costs.
Seventy-three-year-old Tom Maines of Waynesboro, Pennsylvania is also retired, in his case from a 24-year military career followed by another 19 years as a civilian government employee. Like many boomers, he and his wife Cindy, who died in 2019 from cancer, experienced difficult financial circumstances early in their marriage.
“I met Cindy in Taiwan in 1970,” Maines said. “We married in 1973 and transferred to Fort Sill, Oklahoma. When we arrived, our gas tank was empty. So were the pantry, refrigerator, and bank account … Thanks to a small loan and some constructive financial guidance from the Army Emergency Relief fund, we made it. Almost 50 years later, I still donate annually to AER.”
Certified public accountant (CPA) John Bunyan, on the other hand, retires in a few months and looks forward to ramping up his semi-pro career as a comedy writer and standup comedian. John and his wife, Karen, live in Cincinnati, where John’s sense of humor is as essential to the couple’s financial peace of mind as his CPA license. “My retirement,” he said, “will be funded by a carefully balanced portfolio of 401(k) and IRA funds, Social Security, and lottery scratch-off winnings.”
While Bunyan’s first finance lesson was in a high school class where he learned how to manage a checking account, his views on money management were forged at home.
“Watching my mother struggle with being a single working mom and with pay disparities for women gave me insight into the need for financial planning, savings, and budgeting.”
For all of these baby boomers, there’s one clear trend: Comprehending your financial situation and doing something about it early, is key.
Talking & Reading Has Inspired Financial Confidence
Given their generational traits, it’s not surprising that 83% of boomers are at least somewhat confident about managing their finances. Just a small minority of boomers (5%) say they are “not at all confident.”
This confidence comes mostly from reading about finance and from conversations with others. Based on Investopedia’s survey data, 37% of boomers prefer reading as a learning tool, and 35% prefer talking to others. All other modes including watching videos (9%), game simulation (8%), taking a class (4%), and podcasts (4%), received single-digit responses.
“We are very confident in our level of financial knowledge,” Mary said. “We have studied financial matters for decades and recognize that it is vital to have a solid foundation in how money works to lead a happy life. Ignorance about money is not bliss.”
Maines sounds a similar theme about his lengthy experience managing finances. “At this point, I’m confident about my ability to manage money,” he said. “Been doing it a long time.”
Bunyan says he is only “somewhat confident” about his finances. “I feel like I do about writing comedy: I’m good enough, though I know there are better people at it than me.” For him, the best strategy is speaking with investment managers, friends, and professional associates.
Strength in Budgeting, Taxes, and Insurance
Most boomers’ knowledge about managing money isn’t the same across all finance areas. Investopedia survey data shows that the highest perceived level of expertise applies to consumption (or budgeting) and paying taxes, followed by insurance.
Eighty-two percent of boomers say they are at an intermediate or advanced level of managing a budget. Only 18% see themselves as beginners when it comes to this area.
By contrast, a scant 23% of boomers surveyed say they have an intermediate or higher level of knowledge about digital currency. Even high-level money managers like Mark and Mary cite a lack of knowledge about cryptocurrency: “We have studied crypto very minimally but continue to read about it and work to deepen our knowledge.” For Bunyan, tax expertise is a job requirement. When he first started and struggled with the complexity of tax regulations, he now says, “a wise old tax professional told me never to look for logic or reason in the U.S. tax code. That advice became key to my understanding of all tax law.”Mark and Mary have long leaned on financial advisors for basic information on most money-related topics, including insurance. In addition, the couple cites research as a critical part of their financial learning curve.
From a young age, Mark’s father drove home the notion of saving for him. “That was probably the best financial advice I ever received,” he said. “Interestingly, the worst advice I ever received was always to invest conservatively. That also came from my dad. Nobody’s right all the time.”
Retirements Funded By Social Security & Traditional Investments
Among those surveyed by Investopedia, 62% are retired, and 23% say they expect to retire, leaving 16% unsure they will ever be able to quit working. A significant majority (70%) of still-working boomers expect to be able to support themselves with Social Security when they are no longer able to work. That may be more wishful thinking than reality.
When it comes to other retirement expectations, more than 25% of survey participants expect to receive retirement income from pensions and 401(k)s. Others expect income from savings, certificates of deposits (CDs), and market investments. Maines is one of the lucky boomers entitled to a defined-benefit pension. Two actually: one from military service and the other from his post-military civilian job. He says the combination of Social Security and government pensions he receives is sufficient for his needs and “90% guaranteed,” so he isn’t worried about outliving his retirement income. About 43% of boomers are invested, and the most common investments are primarily in stocks (27%) and mutual funds (24%), followed distantly by index funds and ETFs. According to Investopedia survey data, male boomers are more likely to invest than women (50% versus 35%). And those with incomes over $75,000 annually are twice as likely (73%) to invest than those making $75,000 or less (32%). “We began preparing for retirement in our early 20s when we began to work full time,” Mary said. “We have been retired for eight years now.” According to Mary, a good financial foundation and support from their advisors are key to their belief that their retirement is secure. Time and experience are great teachers. Boomers have a wealth of both, so it should be no surprise that 25% of those surveyed say no aspect of managing their finances concerns them. Among those who worry, retirement and living within their means top the list.There’s Still More to Learn
According to The 2022 Investopedia Financial Literacy Survey, 14% of baby boomers say they have a firm grasp of new financial products or technologies—that’s compared to 33% of Gen Z, 45% of millennials, and 35% of Gen X. Just 5% of boomers say they could explain cryptocurrency, and a paltry 3% could explain NFTs.
This is not to say boomers have no interest in gaining more understanding and skill. Here’s how some of those interviewed really feel:
- Bunyan has learned enough to become convinced that digital currency is not for him.
- Maines wants to fill in his knowledge gaps regarding annuities, such as the one from which he will soon draw.
- Mark and Mary are less interested in emerging technologies and more interested in the number one skill boomers say they would like to acquire: How to keep financial information safe online.
How Can Baby Boomers Help Others?
Decades of experience put boomers in a position to share their knowledge with younger generations. The interviewees agree on one thing above all others: Start saving now. Beyond that, it’s a mixed bag.
“Money is not a mystery,” Mary said. “It doesn’t just vanish or appear. Invest in yourself; no one else will. Assume that you will need to take care of yourself financially when you retire and plan accordingly.”
Taking a page out of the boomer social justice playbook, Bunyan advises, “If you don’t like how things are, get involved. Work on and advocate for changing tax and other financial laws and regulations if you believe they are unfair.”
Maines, on the other hand, warns that despite our best laid plans, the “unplanned” happens. As he continues to adjust to life as a single after 46 years of marriage, Tom offers this observation: “Although I still find it difficult when trying to plan for things Cindy and I used to plan together, I am not depressed or stressed. I am financially secure, and that allows me to enjoy time with my sons and my grandkids and experience what’s truly important in life.”
