Baby boomers are selfless? Apparently many are, according to a new study by Ameriprise Financial.
The financial group?s recent study, Money Across Generations, polls three generations: affluent baby boomers (with $100,000 or more in investable assets) along with both the parents and the children (over age 18) of baby boomers. New findings from the study indicate that baby boomers are holding off on major purchases and instead of channeling those savings into retirement accounts to support their Gen X and Gen Y kids and, sometimes, their aging parents.
Boomers Supporting Their Parents
More than half (58 percent) report assisting parents with cooking, cleaning, laundry and transportation (40 percent) and home maintenance (37 percent.) Financial support includes:
- Paying for groceries (22%)
- Medical expenses (15%)
- Utility bills (14%)
Boomers Helping Their Children
It seems boomers are either even more generous with their children or perhaps responding to kids who have even greater needs than their parents.
Even if they can?t afford to help, 20 percent feel guilty about it. But a whopping 93 percent say they have helped their adult children financially, paying for insurance, rent/utilities, credit card debt, down-payments on houses and more. The top financial contributions include:
- Paying college tuition and loans (71%)
- Providing a rent-free home (the re-feathered empty nest) (55%)
- Help buying a car (53%)
The Boomer Dilemna
It?s interesting to me that boomers are helping out financially across the generations, despite the fact that they report a rather dismal view of their own ability to save for a financially secure retirement.
Five years ago, 44 percent of boomers reported that they were trying to grow their savings. Flash forward through the housing bust and the recession and now only one-third say they are doing so. ?But the number of boomers who reported just trying to maintain their savings has doubled since 2007 Ameriprise reported that only 12 percent that as their focus, up to 24 percent in 2012.
Despite this, many boomers have no regrets about helping out family, with 86 percent saying if they had it to do over again they?d still help their adult children get by financially.
While this generous streak in baby boomers may be admirable, those of us who focus on retirement issues may find this news discouraging. We know the costs of retirement can be staggering if not well planned for. I take some comfort in this fact: more than two-thirds of the boomers in this study (68% percent) say they would put money in their own retirement savings before helping adult kids out with car payments and such.
But here?s the flip side: More than half (57 percent) say they would forego their own savings to help their parents out with long-term care insurance payments.
It seems to me that those of us baby boomers who are caregiving for our parents are in quite a predicament. We know that if our parents don?t have adequate savings or insurance to pay for the care they will need as they reach their later years, we will feel the responsibility to pay for it. Helping out with insurance is a preventive step that seems worthwhile for many boomers in the long run.
The bottom line: All generations must think about long-term financial security and retirement needs, and the needs of other family members makes decisions about where the money goes pretty tough for some.
Remember the airplane oxygen mask analogy: You must take care of your own mask (financial needs) before you can be able to help out the person sitting next to you (family).
You?ll be saving them from a bumpier plane ride in the future!
Follow Amy on Twitter @AmyGoyer
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