EP250: The Boomer Legacy (Or Lack of It)

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Boomers and Millennials haven’t always played nice, and the economic playground is no exception.

In fact, one of the areas affected the most is actually real estate.  But can you blame Boomers?

Have you heard how many Millennials it takes to change a lightbulb? None, they’ll just complain about the darkness on social media.

Okay, but seriously, our generations are facing some really unique challenges that other generations haven’t had to deal with.

Think about it – Boomers face retirement savings gaps, rising  healthcare costs, and potential job market hurdles. At the same time, Millennials struggle with massive student loan debt, housing unaffordability, job insecurity, and mental health strains. And addressing these intergenerational issues is a very serious and very real conversation.

👉 But that’s not all. In today’s episode, we are going to really dig deep into each generation, what makes them tick, and how their economic needs and stresses affect the overall economy, financial gain, and most importantly – you. But first, let’s talk about who each generation really is so that we can better understand the big picture. 

This reminds us of a story a friend who works in finance recently shared with us. In their busy office filled with employees of all ages, tensions began to rise during a meeting about implementing new technology.

The younger employees eagerly suggested innovative ideas, while the older members of the team seemed hesitant to embrace change.

Tensions were high, and then one exasperated millennial, unable to contain themselves any longer, blurted out, “Okay boomer, we need to move forward, not backward!” Yikes…

Boomer Blues 

No matter how you feel about them, or if you are one, let’s make sure we all understand what a Baby Boomer is and how they got to where they are today.

You see, Baby Boomers grew up in the years following World War II, when things were quite literally booming, economically speaking, and the world was changing fast. They’re all about that good old hard work and stability.

You’ll often hear them talking about their strong work ethic, how they’re all about putting in the hours and getting the job done right. Loyalty’s a big deal for them too, both giving it to their employers and expecting it in return.

Boomers tend to lean towards tradition and are known to be a bit resistant to change, especially when you compare them to younger generations.

You can see this in the way they shop—they’re more into sticking with tried-and-true brands and aren’t as easily swayed by the latest trends.

But hey, they’re not all about just going with the flow. They’re also big on finding personal fulfillment and chasing their dreams, probably thanks to all those wild cultural revolutions back in their day.

As Boomers grow older, they start putting more emphasis on staying healthy, securing their finances, and planning for retirement.

And when it comes to social and political views, they’ve actually got a pretty wide range, but there’s no denying their huge impact on American politics and policy throughout the years.

But if you really want to know what makes them tick, they’re all about respect, authority, and that classic “save now, enjoy later” mindset. That attitude shapes absolutely everything, from how they spend and invest their money, to the way they live their lives. 

But when it comes to finances, Baby Boomers typically find themselves in a more stable position than their younger counterparts. 😌😌

Thanks to thriving economic periods, better pay rates, and steady job opportunities over the years, they’ve had more chances to build up their wealth through saving, investing, and owning property.

Boomers also often find themselves in a better position with homeownership, many owning their homes outright and enjoying substantial equity thanks to the long-term increase in property values. Unlike today’s job market, they also had access to pensions and retirement benefits, adding to their financial security in retirement.

As a result, this generation holds a significant portion of the nation’s wealth, with estimates indicating that Boomers controlled over half of U.S. household wealth as of the early 2020s.

But keep in mind that like anything, there’s quite a bit of diversity within the Boomer generation.

While some are financially stable, others still find themselves less prepared for retirement, lacking adequate pension funds or savings.

Economic downturns like those in 2001 and 2008 didn’t help either, impacting their investments and savings plans. But overall in comparison to Millennials and Gen Xers, Boomers usually carry lower levels of student and personal debt, giving them more financial freedom overall.

Mysterious Millennials

On the flip side, Millennials, generally born between 1981 and 1996, face a host of unique economic hurdles that set their financial journey apart from that of previous generations, particularly the Baby Boomers. Coming of age during or immediately after the Great Recession of 2008, this generation struggles with enduring impacts on their career paths and earning potential.

But Millennials are also facing a huge challenge when it comes to student loan debt—it’s like nothing we’ve seen before.

The crazy costs of going to college have left so many of them with massive debts, making it really hard to get ahead financially early on. And on top of that, the job market they’re entering isn’t exactly easy.

This generation is all about their side hustle, odd jobs, and contract based employment that most likely doesn’t carry the same stability or benefits compared to your typical full-time jobs. 

Not only that,  but affordable housing is also a big deal for Millennials.

The thing is, real estate prices are skyrocketing 🚀 in a ton of cities and prime locations, making it super tough for them to buy a home. And it’s not just that—between their financial strains and wages staying pretty much the same, saving up for a down payment is definitely a challenge.

The other really interesting thing about Millennials is that they tend to prioritize experiences over material possessions, which has a huge impact on how they spend their hard-earned cash.

They’re also big on social and environmental responsibility, choosing to throw their support behind brands and businesses that share their ethical values. Plus, tech is at the heart of everything they do, from how they consume media to their shopping habits and social interactions.

Although a few Millennials have thrived in the tech industry and entrepreneurial ventures, as a whole, their financial stability doesn’t quite stack up to that of Boomers. 🥺🥺

They’re not as keen on investing in stocks, and often find themselves postponing big life milestones like tying the knot, buying a home, or starting a family due to financial strains.

These unique financial challenges and priorities of Millennials are at the forefront of today’s economic conversations, underscoring the urgency for policy changes and fresh solutions to bridge the gap in wealth accumulation and economic opportunities between generations.

Unique Economic Challenges 

Have you guys seen the movie “The Pursuit of Happyness“?

If not, it’s a touching film inspired by a true story, set in the early 1980s. Will Smith plays a character who grapples with homelessness and financial struggles while caring for his young son, Christopher.

Despite countless hurdles, he never loses sight of his dream for a better life. With sheer determination, resilience, and unwavering optimism, he embarks on an unpaid internship at a top brokerage firm, all in hopes of securing a brighter future for himself and his son. Does that sound like something that could realistically happen in today’s economic landscape?

You see, Baby Boomers are facing a real estate dilemma due to the fact that they purchased their homes with historically lower mortgage rates.

Many are reluctant to sell their homes and upgrade at today’s higher rates, a phenomenon known as the “golden handcuffs.” 

This reluctance has led to a lower supply of homes on the market as Boomers opt to stay put, stalling the anticipated ‘Silver Tsunami’ of downsizing. As a result, there’s a housing shortage, impacting market dynamics and prices.

Millennials are feeling the squeeze as Boomers hold onto their properties, shrinking the pool of available homes and driving prices sky-high.

With the gap between the low mortgage rates of the past and today’s higher rates widening, homeownership is becoming a distant dream for many Millennials. They’re caught in a tough spot—facing steep prices and fierce competition in a market where demand far outweighs supply.

On top of that, stagnant wages and student loan debts pile on the financial stress, making it even harder for Millennials to break into the housing market.

These dynamics really show how one generation’s advantages can unintentionally create hurdles for the next.

It’s clear we need thoughtful policy interventions to address these disparities and make transitions within the housing market smoother.

So how do the economic needs of Boomers and Millennials affect societal resources?

Well, with Boomers retiring, there’s an increasing demand for healthcare services and age-related amenities, putting pressure on public health resources and social security systems. Their desire for downsized living spaces and senior-specific facilities also shapes the housing market and urban planning.

Economically, Boomers still have considerable wealth, influencing investment markets and consumer spending, particularly in healthcare, real estate, and leisure sectors. 💓

But let’s not forget about Millennials.

The economic choices made by Millennials have a huge impact on industries such as housing, technology, and retail.

Their inclination towards renting and urban living has fueled the expansion of multi-family real estate developments and prompted shifts in city planning towards more sustainable and tech-friendly urban environments.

Their consumer preferences also drive demand in the gig economy, sustainable products, and digital services, influencing how businesses strategize their market approaches.

Long-term Economic Impacts

So listen, the generational differences between Boomers and Millennials could have significant and varied long-term economic impacts across multiple sectors. In the housing market, Boomers’ reluctance to downsize due to favorable mortgage rates may perpetuate a housing shortage, hindering home accessibility for Millennials and future generations.

This could lead to ongoing challenges with housing affordability and significant shifts in homeowner demographics.

In the labor market, as Millennials become the dominant workforce and Boomers retire, we could see notable changes in labor dynamics, including potential skill shortages and shifts in workplace culture to better accommodate Millennial values.

The aging Boomer population may also strain social security systems further, causing reforms in pension and healthcare services.

And as differing spending habits between Boomers and Millennials affect national economic strategies, this can potentially slow economic growth and reshape investment patterns. 🤟

At the end of the day, these long-term effects highlight the need for strategic planning and policy adjustments to address the evolving economic needs of both generational cohorts.

Now that we’ve examined how the financial behaviors of Baby Boomers and Millennials impact various sectors of the economy, if you want to get rich, don’t save (do this instead).