Today, as baby boomers age and retire, many will find themselves without the money to live comfortably and achieve their retirement dreams. Many will also find themselves coping with aging parents and adult kids living at home, both of which can put a serious crimp in their financial and retirement plans. For the young people who are starting out their lives or working through their careers and moving into middle age, it is natural to see what is going on with your parents and to want to carve out a different financial future. Avoiding the same money mistakes as your parents made is the key to being able to do this successfully.
Avoiding the Money Mistakes of Generations Passed
While everyone’s situations is different, a lot of the boomers share some similar behavior patterns that resulted in the majority having smaller-than-desired nest eggs and other financial issues. To avoid finding yourself in the same situation, here are a few common money mistakes to avoid that many of the past generation made:
Assuming bubbles are going to last forever. How many of your parents got caught in the tech bubble when dot comes where the hottest thing to buy? How many got caught again in the real estate disaster in 2008 and 2009. Let’s be the first generation to remember that bubbles burst- badly.
- Not discussing money with your spouse. In many cases, the boomers were the first generation where most women worked and where women were able to hold positions in traditionally-male jobs. Many couples were new to making decisions about money together and a lot of these couples didn’t know how to have healthy discussions about money. This contributes to divorces and also contributes to people simply not having enough money to retire comfortably since there was no joint effort to accomplish financial goals.
- Supporting your kids for too long. If you’re the child of a boomer who is currently living off the Bank of Mom and Dad, then you may think that providing you with financial support is not a mistake at all. When you are a parent, you may think very differently. Parents of the past generation were the first to take the label of “helicopter parents,” and as a result, many kids remain dependent long after the time when it is a healthy choice for parents to support them. While it is always nice to provide for your kids, it is a good idea to teach them early on that they will need to be financially independent. You should never sacrifice your retirement or your future savings goals to support the needs of your children- there are student loans for college but no loans for retirement.
- Not saving enough for retirement. The days of a pension for everyone are long over and by the time young people today get to retirement age, there’s a pretty good chance that social security will be a thing of the past too. Don’t depend on the government to take care of you when you get old- not as long as you want to have any reasonable standard of living.
These are just a few of the major money mistakes that your parents may very well have made that you should try to avoid. If your parents are willing, take the time to sit down and talk with them about what they might do differently if given the chance, and then take that advice to heart.