Gens under the lens: The Boomer consumer

Tearsheet is running a new series, Gens Under the Lens. It’s a look into the evolving financial archetypes of the generations — from Boomers to Gen X to Millennials to Gen Z. We look at the current research into their beliefs and habits, giving a sharper view for marketers and product people to better understand what drives today’s financial services customers.

Named after the baby boom phenomenon in the years following WWII, Baby Boomers are the second largest generation following Millennials. 

They’re also a generation that’s been exposed to some of the biggest events in US history, from the Civil Rights Movement, to the Vietnam War, to the first-ever moon-landing.

When it comes to their financial habits, Boomers are often associated as the generation that shies away from the newer stuff. 

But while Boomers do tend to show preference to the more old-school forms of payment and saving, they’re not afraid of trying new things, and in fact, research is showing they’re the fastest growing fintech adopters of all the generations.

Baby Boomer archetype

Baby Boomers are people born the years following WWII -- around 1946 to 1964, according to the United States Census Bureau. 

The Boomer generation is named after the baby boom phenomenon in the US. In the years following WWII, the country saw a record number of births. Between 1946 and 1964 there were 3 to 4 million new births annually. 

The US Baby Boomer population was around 72.5 million in 1964. It peaked at 78.5 million in 1999, including new immigrants in the US born during the same period. Today, Boomers are the largest generation next to Millennials.

Baby Boomers have also grown up and participated in some major moments in US history, including the Vietnam War, the Civil Rights Movement, the Cold War, and the advancement of tech.

There are certain traits associated with this generation, according to research by the Corporate Finance Institute, specifically surrounding their attitudes towards work and their relationships with family and loved ones:

• Strong family ties and relationship values: Growing up with the rise of increased fair labor laws means baby boomers have had more time to cultivate relationships with friends and family, making these connections important to them.
• Hard-working and independent with American Dream-like beliefs: Boomers grew up with the idea of the American Dream -- that if they work hard enough they can reach a state of wealth and fulfillment their parents were always striving for. From that hard work, Boomers are also associated with an independent, can-do attitude. 
• Competitive: With so many born at the same time as them, Boomers grew up competing for spots in jobs and universities with limited capacity.
• Looking for excellence and quality and willing to pay for it: Boomer consumers aren’t afraid to pay extra for products they see as high-value. Following the war, Boomers were exposed to new levels of quality in products and merchandise. 

Today, 35% of Boomers are retired, 40% are still working, and 12% say they’re self-employed, according to research by FIS.

By the end of this year, the youngest Baby Boomers will be in their late fifties.

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Money troubles: Why they worry

With retirement right around the corner, Boomers’ main worries tend to be around whether they’ll have enough saved when they can’t work anymore. Inflation in particular is making a lot of Boomers nervous about their retirement plans, according to a poll by Personal Capital. Because of the pandemic, around 21% say they need to work longer and delay retirement to make ends meet. 77% say they’re somewhat or very concerned about inflation, with 33% being very concerned.

Another concern for Boomers is the financial wellbeing of their elderly parents. With people living longer, the Baby Boomer generation remains a ‘sandwich generation’ -- ‘sandwiched’ between financially supporting their children and their parents, who, as they age, may increasingly need financial support.

Financial literacy: What they know (or don’t)

With Millennials and Gen Zers pigeonholed as the generations lacking financial literacy, there may be the idea that Boomers, in contrast, have a much better hold on financial topics. But research shows that isn’t exactly the case.

While their levels of financial literacy are the highest among the generations, their scores are not exactly something they can brag about.

40% of Boomers and the Silent Generation could answer over 50% of financial literacy questions correctly, but averaged at 55%, according to research by the National Association of Plan Advisors. 

That’s only slightly higher than Gen X (49%), Millennials (48%), and Gen Z (43%). 

The Boomer Consumer: Saving, investing, and spending

Saving behavior

Fidelity’s guidelines say Boomers that earn median income should aim to have $272,000 in their bank account by the age of 60.

Today' Boomers tend to be behind in those numbers. On average, they have $102,400 in personal savings and $138,900 in their retirement accounts, according to Northwestern Mutual’s 2021 Planning & Progress study.

That means a lot of Boomers need to keep playing the saving game.

Investing behavior 

The average Baby Boomer today is invested 60/40 -- 60% in stocks and 40% in bonds in their individual retirement accounts and/or target date funds, according to the Employee Benefit Research Institute. 

Historically, boomers were told by consultants and investment managers to stay the course. But that’s a risky place to be when you’re 10 to 5 years away from retirement. Experts say boomers should be investing 70% in safe assets to protect them from short-term investment losses due to inflation.

Spending behavior

Boomers seem to stick to what they know when it comes to their preferred payment methods. 71% of boomers still show preference for credit cards, debit cards, and cash -- what they’ve always used. 67% will choose merchants if they have a loyalty program.

But just because Boomers have a special place in their hearts for the classic PB&Js of payment methods doesn’t mean they’re afraid of trying avocado toast now and again. 49% say they like to stay up-to-date with the latest payment methods; 57% say it’s easier to pay via contactless; and 45% say mobile wallets make it easier to pay, according to FIS’s Generation Pay study.

39% of Boomer consumers will also choose a retailer based on if they can make purchases through their app. 

How Boomers feel towards financial services

Boomers have the most trust in their banks compared to other generations, according to a survey by Depositaccounts.com, a lendingtree company. Only 2% of the people who changed banks during the pandemic were Boomers, compared to 43% Gen Zers, 35% Millennials, and 19% Gen Xers. 

Meanwhile, Boomers’ bank loyalty was least affected by the pandemic compared to other generations. 84% said their loyalty remained unchanged, compared to 59% of Gen Xers, 44% of Millennials, and 22% of Gen Zers.

But in terms of how they bank, Boomers, like the rest of the country, have had to adjust a bit. 75% of Baby Boomers with a smartphone accessed one of their accounts via a mobile device during the time period between March 2020 and April 2021, according to a study by Cornerstone Advisors.

Still, where there’s an option for in-person instead of online interactions, Boomers do seem to take it. 75% of Baby Boomers said they interacted with branch personnel, compared to only half the respondents in other generations. 17% of Baby Boomers had no human interaction at all during account opening process compared to a third of Millennials and Gen Xers and a quarter of Gen Zers 

But if you have that image of the Boomer swearing in confusion at some unresponsive tech, think again. Most of Boomers’ sought out human interactions seem to come out of habit more than anything else. When it comes to reasons for contacting humans during the account opening process, 33% cited that it was faster and easier, 55% said they prefered to talk to someone, and only 6% said it was because the bank didn’t support what they needed to do.

Boomers also show more traditional preferences in other ways. 60% of Boomers prefer getting paper bills for example, according to Broadridge’s  CX and Communications survey.

But while Boomers may be showing more preference to the traditional ways of managing their finances, they’re not digital naysayers, either. 66% of Baby Boomers in Broadridge’s survey said they’d be more likely to go completely digital if companies made communication feel more engaging.

“Much is made of the technology gap between the habits of baby boomers and millennials. However, our research continues to show baby boomers become more comfortable with engaging with the companies they do business with in new ways,” said Matt Swain, managing director and practice lead for Broadridge Communications Consulting. “Yes, they skew more traditional than millennials with their preferences, but many consumers in this demographic are ready for the next new – especially when it results in a better experience.”

In terms of fintech specifically, Baby Boomers are the fastest growing segment of users, according to research by Plaid.  Fintech use for those ages 56 and older has been doubling year over year to 79%.

Financial tools and companies serving Boomers

Fintechs targeting Boomers tend to zero in on things like ensuring enough money for retirement, protection against fraud, and managing elderly parents’ financial challenges. 

Examples from CBInsights include: 

• Eversafe: An AI tool that helps protect life savings against fraud. The solution analyzes users’ financial behavior and creates a personalized profile so that it can spot things that are out of the ordinary.
• Mason Finance: a software solution that makes it easier for users to sell their life insurance so they have enough money for retirement.
• Golden: A financial management app that helps Boomers track and manage their parents’ expenses in one place.
• Kindur: a platform that lets people approaching retirement age design their own retirement plan.

Banks are also releasing Boomer-specific services. Capital One, for example, offers free online courses to older adults on digital banking. TD Bank allows users to give trusted contacts read-only access so that they can help monitor bank activity. That can be particularly beneficial for Boomers taking care of their elderly parents. 

A look into Boomers’ future

In the third quarter of 2020, almost 30 million Baby Boomers retired, according to the Pew Research Center, with the main reason being Covid forcing these people out of work. That trend seems to be continuing. 75% of respondents say they’re planning to retire early, according to a survey from Coventry. The reasons seem a little less bleak though, with a lot of them saying the pandemic gave them time to reflect on what’s important to them. 

Still, savings remain a major roadblock for a lot of Boomers hoping to retire. On top of that, the sudden wave of retirees could have consequences for younger generations. If Boomers decide to leave their jobs without enough in their pensions, they’ll have to dig into their other sources. That could lead to much smaller inheritance.

But fewer Boomers in the workforce does open up new senior level roles for Gen Xers and Millennials. 

Then of course there’s the Great Wealth Transfer that’s approaching.  By the end of this year, Americans over the age of 70 will have networth of almost $35 trillion. According to Federal Reserve data, that amounts to around 27% of all US wealth -- a 20% increase compared to three years ago. Between 2018 and 2042, Boomers and the older generation are expected to hand down $70 trillion dollars -- $61 trillion of which will go to heirs -- Millennials and Gen Xers.