Two generations witnessed major moments in history. The Greatest Generation (parents of Baby Boomers) lived through the Great Depression and World War II. Baby Boomers grew up during the post World War II era and experienced Beatlemania and Woodstock. They also witnessed the Vietnam War whether they were protesting, fighting, or watching it on the news.
The biggest difference between the two generations is that Baby Boomers grew up during a prosperous time. They were making more money, had access to credit cards, and were spending freely because it was good for the economy. Advertisements on T.V. told them to buy new products and appliances that they probably didn’t need. It’s safe to assume that the Baby Boomer generation had more privileges than their parents' generation.
So how does this tie into retirement preferences between both generations? Well, the Greatest Generation was more cautious about saving for retirement because they had lived through the Great Depression. It taught them to be thrifty about money. This cautious outlook prepared them well for their retirement. They learned to invest and pinch pennies wherever they could. They stashed money away by opening savings accounts, buying bonds and certificates of deposits, and investing in their pensions. The Greatest Generation didn’t travel on vacation or spend as much and they didn’t have the life expectancy that Baby Boomers have today.
Baby Boomers, on the other hand, have different retirement preferences. Baby Boomers are living longer and retiring in their 60s. They are traveling more, buying vacation homes and new cars, dining out, and spending more on entertainment and attractions. Studies have shown that most Boomers haven’t saved enough for a lavish retirement lifestyle or know how to save for the retirement lifestyle they desire. Baby Boomers are faced with the question of how much money they need to save to build a nest egg that can support a comfortable retirement lifestyle.
As corporate pensions were phased out and the introduction of the 401(k) came into play, many Baby Boomers didn’t start saving early enough or putting away enough money into their retirement accounts. But they do have more investment options than their parents did such as income investing, IRAs, high yielding securities, stocks and bonds, and diversifying portfolios.
Baby Boomers are a part of the largest generation of all time and face many challenges when coming into retirement. They risk more in order to try to gain more returns. But one lesson they should have learned from their parents is to save more and spend less. But then again, who can resist splurging on a new flat-screen T.V. or vacationing on a tropical island a few times a year?