by Sean Kelly
The phrase “Okay, Boomer,” gained prominence last year when a Millennial member of the New Zealand parliament used it to silence a heckling older statesman. Chloe Swarbrick was in the midst of delivering a passionate speech about how climate change is threatening her generation, when a “Boomer” became agitated. The term was a flippant retort, but also a dismissal of all those born between 1946 and 1964, deeming them out-of-touch and close-minded. Indeed, it is “sticks and stones” payback for many Gen Y’ers who believe that the term “Millennial” has been similarly used to dub all young people as entitled and mollycoddled.
While not a wholly homogeneous group, Baby boomers are generally regarded as self-assured and goal-centric. They are the children of the “greatest generation,” and they’re great in their own right. Boomers are credited with developing personal computing, the World Wide Web, Rock and Roll, DNA fingerprinting, counter-culture, and the notion that “Greed is Good.” They were also on the front lines of gender equality, diversity, and booming entrepreneurship. Most notably, they were among the 400,000 young people that shut down the New York State Thruway for the Woodstock Music & Art Fair back in 1969.
Steve Wozniak, Bill Gates, and Steve Jobs are all Baby boomers. So are Oprah Winfrey, Stephen Spielberg, and Meryl Street. George Bush, Bill Clinton, Barack Obama and Donald Trump are also on the list along with Elton John, Stevie Wonder, Melissa Ethridge and Jimmy Buffett.
AARP describes their Baby boomer demographic in this way:
“We’re the largest, richest, best-educated generation of Americans, the favored children of a strong, confident and prosperous country. Or, as other generations call us, spoiled brats. Born between 1946 and 1964, the 76 million boomers reaped all the benefits of the postwar period’s extraordinary economic growth.”
Financially, Baby boomers are a powerful economic force. They’re the richest generation in history and currently control more than half of all U.S. household wealth. They have, on average, quadrupled their aggregate net worth since the late 1980’s. According to Epsilon Data Management, Boomers also spend more than any other generational group, consuming over $548 billion annually in goods and services. And they can afford to. Money and the Markets maintains that Baby Boomers have captured about two-thirds of all wealth gains (about $10 trillion) recorded during the Trump administration.
Baby boomers are also hurling toward retirement at a rate of about 10,000 a day and despite their collective wealth – the Insured Retirement Institute reports that some 45% have no savings, four in ten believe that Medicare will cover their long-term health care costs, and six in ten have taken no action with respect to their workplace defined contribution plans.
For a generation that has always brimmed with overriding confidence, the prospect of retiring comfortably has suddenly given Boomers pause. They’re worried about nest eggs falling short, social security becoming insolvent, the cost of living rising too fast, and health care bills wiping out everything they’ve saved, accrued and amassed.
A recent MarketWatch feature identified the ‘seven deadly sins’ of Boomer retirement planning as including insufficient savings, the premature draining of retirement accounts, and a fundamental lack of retirement planning. Extreme portfolio risk completes the list, as Boomers are also wildly overleveraged in stocks. According to Fidelity’s third-quarter retirement report, almost 1 in 3 Boomers are heading into their golden years extremely “equity-heavy”:
“Fidelity’s Q3 analysis found that many 401(k) account holders had stock allocations higher than those recommended for their age group. Fidelity compared average asset allocations to an age-based target date fund and found nearly a quarter (23.1%) of 401(k) savers still have a higher percentage of equities than recommended, including 7% who are 100% equity. Among Baby Boomers, the over-allocation of stock was even higher – 37.6% have too much equity, including 7.9% who are in 100% equities.”
While Baby boomers have ridden the markets to unprecedented levels of wealth, they now risk the downside hazards of staying in for too long. Asset allocation is critical to wealth protection and when it comes to safeguarding retirement and savings accounts in 2020, gold is an ideal diversifier. Its lack of volatility, low correlation with other asserts, and exceedingly long history of holding value – make it part of a smart 21st century portfolio strategy.
And, there is perhaps no better asset for a self-driven, self-reliant generation like Baby Boomers than independent money that exists outside the banking system and well beyond the reach of government.