5 Money Skills Baby Boomers Need to Keep Learning

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Boomers have a lot of experience, both in life and in the financial markets. This can help them avoid some of the more common financial mistakes that younger generations can make with their portfolios.

Find: 7 ways baby boomers are wasting money in retirement — and how to stop it
See: 3 ways to recession-proof your retirement

However, as the financial services industry continues to evolve, even boomers need to take note of the ongoing changes. Keeping up to date with the latest market conditions, technological advances and investment opportunities is vital to optimizing a long-term portfolio, so boomers in particular must continue to learn money skills. Here are some of the most important.

Using technology to support your finances

Technological advances in the world of finance are coming fast these days. While boomers may have started their investing lives by calling their full-service broker to make trades and even get information about the markets, those days are over. Now countless budgeting, saving, and investing apps — many of which are free — can help investors plan their portfolios, make trades, do market research, and manage their entire financial lives right from the palm of their hand.

While many boomers still find it more convenient to call their financial advisors or visit them in person, for countless others this added convenience and access to information can transform their financial lives. Boomers should continue to learn how technology is changing the landscape and how some of these tools can help them with their own personal finances.

Budgeting for new expense types

Technology has done much more to transform the world of finance over the last few decades. The world as a whole has become much more connected, and modern conveniences have transformed everything from driving a car to watching entertainment at home. And while many of these advances have made life far more convenient, they usually come with new costs as well.

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While it’s great to be able to click Netflix or Hulu and choose from thousands of movies or TV shows to watch, you also need to budget for a monthly subscription. If you’re a music lover, services like Amazon Unlimited let you choose from almost every song ever released — but again, you’ll have to pay a monthly or yearly fee. In this technologically advanced era, it’s especially important for boomers to educate themselves about how these services work, how to budget for them, and how to decide if they’re worth the cost.

Choosing the Right Social Security Strategy

Although Social Security may seem like an automatic retirement benefit, the truth is that you can only get the most out of it by regularly reviewing your entitlement strategy. There is no one “right” Social Security strategy, and a number of factors—factors that may change throughout your life—affect what ultimately works best for you.

For example, you might want to apply for Social Security as early as possible, at age 62, but as you get older you may find that you’ve already accumulated a sizeable nest egg in your retirement accounts. In this case, it may make sense to wait until age 67 or even age 70 to file to increase your monthly paychecks. Of course, as you start earning more later in life, your benefit will increase, potentially necessitating a recalculation of when you should start Social Security. In any case, these decisions are best made in consultation with a financial advisor.

managing inflation

It’s been decades since inflation was a serious threat, but that changed in 2021 and 2022. Inflation peaked at 9.1% in June 2022, the highest rate in over 40 years. Most boomers probably haven’t considered how much high inflation can erode purchasing power, and the longer it persists, the more damage it can do to the true value of your retirement portfolio. In other words, if you’ve maintained the same dollar goal for your nest egg throughout your investing career, you may need to increase that number to maintain the standard of living you envision in retirement.

Management of real estate profits

If you bought your property more than two years ago, you’re probably sitting on a big win. This may be a new experience for many homeowners. While some may have seen their home prices rise steadily, in 2020 and 2021 prices have skyrocketed over a relatively short period of time. Even if you’ve planned on holding your home for the rest of your life, the big win you may have now gives you additional options worth knowing.

One option is to simply pocket this huge gain and invest it directly in your savings or investments. But if you go down this route, you have to factor in potential taxes – and the fact that moving to a new home can be a lot more expensive. With housing prices skyrocketing and mortgage rates rising, even downsizing to a smaller home is likely to result in a higher monthly mortgage price.

There are other ways to tap into your home equity such as B. Home equity loans or HELOCs, but you need to brush up on how they work before considering them. Being in constant contact with a financial and/or tax advisor regarding these types of real estate strategies can help you prepare for the time when you are ready to make a move, if any.

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