Personal Finance

Baby Boomers Have Never Been So Wealthy, Yet Many Aren't Feeling the Booming Economy. Here's Why.

Chris MacDonald

Published: January 18, 2025 10:15 am

Baby boomers now hold an unprecedented share of the nation’s wealth, with those born during this specific period now officially holding approximately 51.8% of U.S. wealth as of the early 2020s. That’s more than half the wealth of the entire U.S. economy, despite this demographic representing around 21% of the overall U.S. population. 

And while those who fall into the baby boomer generation (the born between 1946 and 1964) technically have more wealth as a percentage of the population than any other generation, many may not be experiencing the robust economic prosperity personally. Indeed, averages tell only part of the story, and there are plenty in each generational group who have their own individual struggles.

Let’s dive into why so many baby boomers may not feel as wealthy as they actually are, and what’s at the root of this paradox.

Key Points About This Article:

• With tens of thousands of baby boomers aging into this demographic group each day, more attention is being paid to the financial health of this particular group.
• Despite holding the majority of the country’s wealth, many in this group don’t feel as wealthy as they are – here are some of the reasons why.
• Retiring early is possible, and may be easier than you think. Click here now to see if you’re ahead, or behind. ^(Sponsor)

Uneven Wealth Accumulation Among Baby Boomers

Following the Second World War, baby boomers benefited en masse from the economic boom that followed, with the U.S. coming out of the war as the true undisputed economic powerhouse of the world. With plenty of land and resources to build out a growing economy (which was much broader in scope and included much more manufacturing), workers were able to see their productivity gains correlate nearly on a 1:1 basis with wage gains, a trend that’s since slowed in recent decades.

With capital gains tax decreases in recent decades and a shift toward the financialization of key markets, asset owners (mainly baby boomers) have managed to greatly outpace previous generations in terms of wealth accumulation by age 65, holding about 50% more wealth than previous generations in the past. 

That said, this prosperity hasn’t been evenly-distributed, and has caused concern for many baby boomers who now have millennial children who may need assistance. With many in the younger generations experiencing overwhelming student debt, escalating housing costs, and stagnant wages, many baby boomers feel the need to fill that gap. This can lead to financial stress as budgets become strained tied to current or future healthcare expenditures (which have also risen faster than the pace of inflation for a long time). 

To add, while Baby Boomers are poised to pass down an average of $3.1 million each, many may opt to spend their savings rather than save for inheritances. Such a situation would potentially deepen the economic disparities between the generations. This trend underscores a shift in retirement spending and its impact on future wealth distribution.

Economic Disparities and Challenges

Despite the unprecedented resources at their disposal, many baby boomers experience a profound sense of economic insecurity. As mentioned, one of the key line items on most households’ current and future budgets which is becoming increasingly difficult to pencil in is healthcare costs. As baby boomers age, increased medical expenses stand as the black swan that has the potential to significantly drain financial resources. The reality that healthcare costs are only likely to rise means that baby boomers may need to prioritize saving over spending to ensure there’s enough left over to cover future health-related needs.

Now, one of the perks of having among the most expensive healthcare systems in the world is that baby boomers are poised to live longer than any generation (and Gen X/Millennials may actually be among the first generations to see a decrease in longevity for the first time in centuries). However, living longer does come with strings attached. Many baby boomers may feel the need to reset their retirement models to plan on living longer. The fear of outliving one’s savings is real, and is something that will add to the planning headaches already facing a burdened generation.

Finally, a shifting economic landscape which is characterized by higher living costs and greater competition for jobs may mean finding a part-time gig in the future won’t be as lucrative or easy as it once was. This macroeconomic shift could impact the financial security of millions of baby boomers, and shift expectations in terms of how this generation plans and budgets for retirement.

Moving Forward

A monumental wealth transfer from Baby Boomers to Millennials is on the horizon, estimated to be worth around $53 trillion by 2045. However, this transfer is fraught with complexities, such as inheritance taxes and the varied wealth levels within the boomer generation itself. While millennials stand to inherit significant assets, their current financial instability adds another layer of complexity to this transfer.

Baby Boomers possess wealth that far surpasses that of previous generations, but the economic satisfaction this wealth should confer remains elusive for many. The challenges of healthcare costs, longevity risks, and a shifting economic landscape contribute to a feeling of disconnect from the perceived booming economy. As we look towards the future, understanding these dynamics will be crucial in addressing the economic insecurities faced by not only baby boomers but also the generations that follow.