5 Financial Habits That Keep Baby Boomers Wealthy

Having amassed over $80 trillion in wealth, baby boomers have built incredible financial security over the years. While younger generations may feel like they’re struggling to catch up, we can learn from the financial habits that have helped boomers grow and maintain their wealth. These habits are actually smart strategies that have stood the test of time.

Investing in Stocks and Letting Them Grow

Baby boomers have invested heavily in stocks and mutual funds that have allowed their money to grow over time. The S&P 500, for example, has averaged a 10% annual return, and boomers took full advantage. Compared to millennials, they hold nearly double the percentage of their wealth in stocks.

Avoiding Excessive Debt

Unlike younger generations, who often rely on credit cards or buy-now-pay-later services, boomers have generally been more cautious about debt. Many paid off their mortgages early, avoided unnecessary car loans, and steered clear of high-interest credit card debt. They keep debt low to grow their wealth rather than pay off interest.

Investing in Real Estate

Owning property has been another major financial win for baby boomers, with real estate making up over $18 trillion of their total wealth. While housing prices have risen, so has the value of the homes they purchased years ago. Some boomers even pass down properties to their kids.

Spending Less Makes a Big Difference

Boomers know when to cut back. An Empower survey found that 80% of them reduced non-essential spending due to inflation, compared to just 56% of Gen Z. Budgeting strategies like the 50/30/20 rule aid people in ensuring that money is spent on needs and future goals first.

Using Side Hustles and Passive Income

While the gig economy is often linked to younger generations, boomers have long understood the value of side income. Many have rental properties, dividend-paying stocks, or small businesses that provide steady income streams. Even in retirement, some boomers continue consulting, freelancing, or working part-time to keep money flowing while maintaining financial security.

Being Open About Money in Relationships

Honest conversations about finances keep boomers financially stable, and they often don’t hide purchases from their partners. Financial disagreements happen in all relationships, but clear communication helps avoid surprises and keeps both partners on the same page.

Prioritizing Retirement Savings Early

Boomers took advantage of employer-sponsored retirement plans like 401(k)s and pensions and often contributed consistently from their first job onward. Many maxed out their contributions and took full advantage of employer matches and compound interest over decades. This long-term approach means they have sizable nest eggs while younger generations struggle to catch up.

Turning to Professionals for Smart Money Moves

Baby boomers know the value of expert advice. According to the 2024 Policygenius Financial Planning Survey, 39% of baby boomers seek financial professionals first for money questions, while only 14% of Gen Z do. Working with professionals helps them make smarter investment choices, reduce risk, and confidently plan for retirement.

Living Within Their Means

Boomers have embraced frugality by choosing to spend on value rather than trends. Instead of upgrading cars every few years or chasing the latest gadgets, they’ve stuck with what works. Many also took the “used is just as good as new” approach by buying secondhand furniture, cars, and clothes to keep costs down.

Leveraging Employer Benefits

Boomers took full advantage of benefits like pensions, stock options, and health insurance through their employers—perks that are becoming rarer today. Many stayed with the same company for decades, which allowed them to build steady retirement accounts and avoid costly healthcare expenses. Their ability to maximize workplace benefits helped them secure long-term financial stability.

Sticking to a Long-Term Investment Strategy

Every time the stock market dipped, boomers didn’t panic. Younger investors might jump in and out of the market trying to time their trades, but boomers stuck with their investments through recessions, bear markets, and economic downturns. This patience paid off, as the market’s long-term growth rewarded those who stayed invested.

Teaching Financial Lessons to Their Kids

Many boomers didn’t just build wealth for themselves; they passed on financial wisdom to their kids. Whether it was teaching the importance of saving, budgeting, or investing early, boomers helped their children avoid costly mistakes. By instilling good money habits, they set up future generations for financial success.

Taking Advantage of Tax Breaks

Baby boomers have been savvy about taxes; they used deductions and credits to keep more of their hard-earned money. Many contributed to tax-advantaged accounts like IRAs and HSAs, claimed mortgage interest deductions, and structured withdrawals in retirement to minimize tax burdens.

Avoiding Lifestyle Creep

Even as their incomes grew, many boomers resisted the urge to splurge on bigger homes, fancier cars, or unnecessary luxuries. Instead of upgrading every time they got a raise, they kept their spending in check and funneled extra money into investments and savings. This discipline helped them build lasting financial security.

Planning for Healthcare Costs Early

Boomers understood that medical expenses could eat into retirement savings, so many took steps to prepare. They invested in long-term care insurance, contributed to Health Savings Accounts (HSAs), and factored healthcare costs into their retirement plans.