Born in 1954, I’m smack in the middle of the Baby Boom generation, so called because we were born in unprecedented numbers following the end of World War II in 1945. Our side won, by the way, and we grew up in the equally unprecedented prosperity that lasted through the 1960s. We were the first generation to grow up watching television, driving cars and traveling on airplanes.
And the post-war economic boom provided us with unequaled prosperity at a young age. Combined with our sheer numbers, our spending habits have had a major impact on products and the economy as a whole. For instance, we didn’t invent rock ‘n roll, but we embraced it and made it what it is today. And the same can be said for TV, air travel and digital technology.
Yet despite all of this, we’re also the generation that just can’t get any respect. For starters, we followed the ‘Greatest Generation’ (coined by the late Tom Brokaw), who lived through and won WWII. That’s a tough act to follow.
Consequently, we were early on dubbed the ‘Me Generation’ for our seeming inability to see beyond our own self-interest. We were roundly criticized for our morals (we were also the first generation to benefit from widespread birth control pills), our music, and our fashion sense (okay, some of those clothes in the ‘70s were hideous). What’s more, as the first to widely adopt divorce as a viable relationship strategy, we have been blamed for the demise of the traditional family. And, of course, having lived through the double-digit inflation years of the late ‘70s, we learned early on to “spend it while we got it.”
But wait, there’s more. Due to our large numbers, the following generation—Gen X—first blamed us for their lack of educational and employment opportunities and, more recently, for keeping them down by refusing to retire at a traditional age. Personally, I blame punk rock and “alternative” music.
Apparently, we Boomers are not off the hook yet. I refer you to Bloomberg journalist Ben Steverman’s July 15 story The Richest Generation in U.S. History Keeps Getting Richer . I mean, really? And yet, despite the obvious observation that since the beginning of the Industrial Revolution in the late 1700s, virtually every “oldest generation” has also been the wealthiest, the author and other commentators seem to have overlooked the extremely good news for financial advisors in this latest data about my generation.
But first, here’s how Steverman (clearly a disgruntled Gen Xer), describes the fact that we Boomers have been able to get past our “inflation fears,” and managed to put away a tidy nest egg: “For now at least, wealthy boomers have a lot more money to spend than they had any right to expect in the depths of the 2008 financial crisis. But that scary experience — and the natural instincts to be conservative early in retirement — are likely to hold boomers back from spending their new wealth. Unfortunately, both for the economy and for the boomers themselves, the people benefiting most from the stock market’s record high may be the most cautious about enjoying it.”
For real? Let me get this straight.
Now that the Me Generation has finally overcome our inclination toward self-indulgence and the fear of inflation, to save enough to support ourselves in old age—and probably leave something to our children and/or grandchildren—we are once again jerks for not blowing the whole wad on a bucket list?
Okay, now that I’ve gotten that off my chest, here’s the good news. Steverman cites a Texas Tech study in the Journal of Financial Planning that shows from 2000 to 2008, the wealthiest 20% of 65- to 70-year-olds “had a gap of as much as 53% between their spending and what they could have spent. Retirees in the top quintile of financial wealth were spending nowhere near the amount that would place them in danger of running out of money. In fact, the average financial assets of wealth retires increased during this period and most retirees spent less than their income.”
Now call me crazy, but spending less than your income and ensuring that you won’t run out of money during your retirement seems like pretty good ideas. Yet, Steverman couldn’t help but snark: “That’s quite a feat when you’re no longer working, particularly against the backdrop of the mediocre stock market of the early 2000s.”
As I said, we get no respect. However, if anyone should be excited about this data—other than we Boomers ourselves—it’s financial advisors. For years now, they’ve been hearing doom and gloom about the dire consequences that will befall their businesses when all their Boomer clients (who tend to be those top 20% of wealth) start depleting their portfolios and those AUM fees begin to nosedive.
Instead, those Boomer portfolios are actually growing. Which means that instead of following the conventional wisdom of courting Gen Xers (who, if Steverman is a representative, seem to be spenders, not savers), and Millennials (who don’t yet have any assets), today’s advisors should be focusing on: 1) keeping their Baby Boomer clients; and 2) devising strategies to continue managing those growing portfolios for their clients’ children.
And just maybe the younger generations can give us a break.