5 Baby Boomer Financial Behaviors and Attitudes to Watch

1. Leaving an inheritance— There appears to be a significant shift in boomers’ attitudes about leaving an inheritance for their children when compared to boomers’ parents’ attitudes. Only about half of affluent boomers (those with more than $3 million in investable assets) believe that leaving behind money for their children is important, compared to nearly three-quarters of boomers’ parents, according to a survey conducted by U.S. Trust.

One reason may be that boomers don’t tend to have confidence in their children to spend an inheritance wisely. Nearly seven out of 10 boomer respondents in the U.S. Trust survey said are not confident their kids can handle an inheritance responsibly.

2. Being prepared for retirement— More than 43 percent of baby boomers may not be able to pay for basic living expenses during retirement, a recent analysis by the Employee Benefits Research Institute (EBRI) determined. As a result, boomers’ children could end up having to support them in their later retirement years, EBRI noted.

One expert on caring for aging parents estimates that adult children will spend between $6,000 and $10,000 a year extra on food, clothing and other basics for parents who move in with them. This is a bargain, however, when compared to supporting them in an assisted living community, which costs an average of about $42,600 a year.

3. Expectations regarding life in retirement— There appears to be a disconnect between what baby boomers think their life in retirement is going to be like and what current retirees say life actually is like. About a fifth of pre-retirees (those over 50 who haven’t retired yet) think their financial situation will be worse in retirement than it is today, but about a third of current retirees say it actually is worse. And 14 percent of pre-retirees think that overall life in retirement will be worse than it is today, but 25 percent say it actually is worse.

4. Paying for their children’s college educations— Many boomers feel a moral obligation to put their children through college in order to give them a good head start to a successful life. However, some (about one in six) say this has affected their ability to save enough money to retire comfortably, a survey by Capital One ShareBuilder found.

In fact, just having children, not to mention putting them through college, is a major financial commitment. A typical middle-income family in the U.S. will spend more than $220,000 to raise a child from birth through age 18, according to the U.S. Department of Agriculture, which is up 23 percent (in current dollars) since 1960.

5. Overall happiness and contentment— A study published in the American Sociological Review journal found that baby boomers are the least happy of all age groups. On average, boomers rate their lives a 6.2 on a scale of 1-10 compared to a 6.7 for older Americans and a 6.5 for younger Americans.

Given this, it may not be too surprising that divorce rates among baby boomers have doubled over the past 20 years, according to the National Center for Family and Marriage Research. Some experts attribute this to the fact that many boomers are not prepared for the “empty nest” syndrome: When their children leave the home and they have more time alone together, they find that they are not as compatible as they thought they were.

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