Boomers Have Less Equity, More Debt than Past Generations

Compared to older generations, baby boomers are facing retirement with more debt, smaller savings accounts, and less home equity, a new report from the Stanford Center on Longevity reveals.

The center recently released its special report “Seeing Our Way to Financial Security in the Age of Increased Longevity.” This work is part of the Sightlines Project, which looks at how well older adults are doing in three areas: healthy behaviors, financial security, and social engagement.

Along with boomer savings and debt, the report dove into generational shifts in U.S. homeownership, the prognosis of Americans’ retirement contributions, and women’s financial decision-making. The report sought to answer the question of how older Americans are embracing longer lifespans and if they taking advantage of it.


“Or are we missing the mark, reaching old age ill-prepared and in worse shape than preceding generations?” the report queries.

When it comes to financial security, the evidence was not encouraging, the report states.

In general, baby boomers are more financially vulnerable compared to the silent generation before them. When comparing the two groups, results prove boomers had less home equity accumulation, financial wealth, and total wealth. Mid boomers — those born 1954 to 1959 — had the least amount of net worth and home equity. The report emphasizes that the financial crisis in 2008 was especially hard for boomers who were trying to retire at that time.

“Earlier cohorts enjoyed a long and steady growth in home equity, helping them to withstand the burst of the housing bubble in the late 2000s,” the report reads. “Boomers in their mid to late 50s were hit relatively hard by the housing market crash, with greater loss in equity.”

In addition boomers have less saved, with the report stating that one-third of boomers had shored up nothing in retirement accounts — either workplace plans or IRAs — in 2014, leaving them with limited time to save. For those who had contributed to an account like this, the median was only about $200,000.

In addition, this retiring generation has mounting debt.

“About two-thirds of baby boomers had debt in 2014, compared to only 20 percent and 40 percent of those born before the early 1940s,” the report states. “Among households with non-zero debt, mid-boomers’ average debt reached $120,000, much higher than that of prior generations. Holding age fixed, boomers age 55-60 had a higher debt burden.”

Although these financial findings are discouraging for those immediately facing retirement, this lack of preparedness will have far reaching effects for younger age groups.

“Considering the vast size of the boomer population, increased life expectancy, and the rate at which today’s boomers are retiring, being ill-prepared for retirement has profound implications for the overall well-being of individuals, families, and society today and for generations to come.”

Written by Maggie Callahan

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  • The distribution of home equity wealth is a dark family secret in the reverse mortgage industry. As one of the three key assumptions to the growth and wide spread use of reverse mortgages, home equity is rarely stratified by age in the way presented in the article above. Those born before 1940 will soon all be 80 years and older. Current reverse mortgage originations decrease as seniors age once they reach age 80.

    So even though the ranks of seniors who are Baby Boomers is swelling, will their lack of home equity compared to the generations who precede them, cause our view of two of the three fundamental precepts (growing home equity and Baby Boomers swelling the senior population in the US) we hold dear as to future reverse mortgage demand turn out to be the Achilles’s heel to our heavy reliance on them for future growth? The one fundamental precept that does not seem change over time is the implicit understanding that younger seniors are not as prepared for the financial demands of retirement.

    The article above undermines two of the three most crucial underpinnings in the growth and use of reverse mortgages, now and for years to come. We are now almost at the eleventh anniversary of the first Baby Boomer with only eight more to come thereafter. Will January 1, 2027 mark the beginning of originator discontent? Or will it be much earlier as once again we hear the same old empty and feckless messages of endorsement growth just around the next bend.

    Be prepared! For fiscal 2019 may have less endorsements than fiscal 2018, a new lower trend, outside of our current secular stagnation trend. When can we expect things to get better?

  • Unfortunately this article is fairly accurate. Not all baby boomers are in this position but many of them are.

    It is sad, this comes from many years of fluctuations in the markets, changes that have occurred in the economy and many seniors have lost their jobs and retirement plans as well as losing money in the stock market! Also, many seniors did not plan properly, unfortunately!

    A HECM or proprietary product in many cases can solve a lot of problems, such as, paying off bills, paying off liens on their homes ETC. If seniors in this position can qualify for a reverse mortgage, it can change their lives around completely!

    There are senior homeowners out there that have enough equity in tier homes and a low enough lien on their properties that can qualify. Maybe not as many as before but there are still a lot out there that can!

    John A. Smaldone

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