Baby Boomers Realizing a Financial Squeeze between Generations

By Carol Johnson

A recent poll of 3,014 adults, including 1,117 baby boomers, conducted by the Pew Research Center, found that 29% of baby boomers with parents still living are helping to support those parents financially in some way or other. The poll also found that 68% of baby boomers with adult children are providing financial assistance to them. And 13% of all baby boomers are providing financial support to both parents and children.

The approximately 75 million adults in the generation referred to as baby boomers-people born between the end of World War II through 1964-now range in age from 41 to 59, with the oldest turning 60 in January 2006. Paul Taylor, executive Vice President of the Pew Research Center, says that every generation goes through a type of "sandwich phase" where adults provide financial support to generations both older and younger. But for the baby boomer generation, demographic and economic trends are making that sandwich phase more difficult. Thanks to medical advances and healthier living, parents are living longer. Young adults are faced with steadily increasing costs for college, housing, and costs of living. The combination of those facts results in more financial responsibilities for the generation in the middle. "The sandwich phase of life is not a new phenomenon," Taylor said. "All generations go through it. It's just lasting longer for boomers."

The Pew poll's findings were not all that surprising. About half of the baby boomers polled expect that some type of private investment account will be their primary source of income after they retire. Twenty-one percent of them expect that Social Security will be their largest source of income, and 19% think that employer pension plans will provide most of their financial support. Of the baby boomers who have already retired, 42% said that Social Security is their largest source of income.

Two-thirds of the boomers polled said that parents are responsible for paying for their children's college education, but only one-third said that parents have a responsibility to provide housing for adult children. Fifty-six percent of boomers say that adult children have a responsibility to provide housing for elderly parents, either at their own homes or in retirement facilities. A Gallup poll in 1989 found that 60% of people age 41 to 59 had at least one living parent, and that percentage is rising with each year that passes. The Pew poll found that 71% of the baby boomers polled had at least one living parent.

The expectations of baby boomers may be unrealistic given the financial squeeze they are finding themselves in. Fifty-five percent said that after they retire they expect to "live very comfortably" or at least "meet expenses with a little left over." But 24% said that they expect to just barely meet living expenses, and 17% said they are not expecting to have enough money for the basics to meet the demands of life. So as baby boomers edge closer to retirement, they are having to face facts and realize that with age comes responsibility-the dual responsibility of caring for generations that came before and after theirs. The summary description of the Pew Research Center poll's results said, "Most are finding that they are not in the Age of Aquarius but in the age of responsibility."