The Average Baby Boomer Started Investing At This Age
Today, individuals are heavily advised to begin investing early in life rather than kicking the can down the road. And it's for good reason; a person's 20s are widely considered the most valuable time to invest as it allows more time for compounding and lessens the total amount needed to invest in order to have a comfortable retirement. In fact, not investing by that age can be a costly mistake. However, baby boomers, who are often defined by their strict saving and budgeting habits, missed this financial benchmark. According to the Modern Wealth survey from Charles Schwab, the average baby boomer, born between 1946 and 1964, did not begin investing until the age of 35.
Compared to younger generations and the average American, baby boomers began investing at a later age. According to the survey, the average person begins investing at 30. However, Gen Zers have really taken investing advice to heart and on average begin investing at 19. However, baby boomers have good reasons for being late to the party. Historically, this generation has had fewer tools for investing. As an example, Individual Retirement Accounts weren't available until 1974 when the oldest baby boomers were in their late 20s. Instead boomers relied on employer plans and pensions for investing, but even then only about 24% had a pension, according to the Alliance for Lifetime Income.
What investing at 30s means for long-term wealth building
Starting to invest at age 30 means individuals still have decades for their investments to grow, and
not investing by this age will cost you
. However strategies may look a bit different at this age, starting with a savings account. Individuals in their 30s should realistically be able to save a year's worth of salary by the time they reach 30. Having this cash as savings means you'll have a safety net for unexpected events, which can prevent early withdrawals from investment accounts, allowing your money to grow for longer stretches of time. To build wealth, 30-year-olds should look to keep around 80% of the holdings as stocks and 20% bonds, according to
, instead of the 90/10 split recommended for 20-year-olds. And because of the shorter time frame, 30-year-olds should also think about increasing their contributions by at least 1% every year to make up for the lost time.
Baby boomers, despite starting to invest in their mid-30s have accumulated significant wealth. According to Empower, the average 401(k) balance for baby boomers stands at $557,566 and they have an average net worth of $1.6 million. A large part of their investing emphasis is placed on income generation and liquid assets. According to Empower, baby boomers keep around 29.6% of their investment in cash and 10.5% in U.S. Bonds, meanwhile Gen Xers only have 5.89% of their money in bonds. This makes sense, as baby boomers main motivation for investing is to secure a comfortable retirement and bonds and cash are investment opportunities that make sense for retirees.