As the vaccine rollout in the U.S. progresses and the country begins to re-open, many are predicting an influx of consumer spending from pent-up demand over the past year.
Baby boomers, who were in the earlier stages of vaccination priority, make up a notable percentage of those who are venturing back out into the world and opening their wallets to boost the economy.
However, as Americans prepare for a boom in spending, there are some important tips financial advisors should keep in mind.
Our recent CIT Bank survey reveals that across generations, Americans have prioritized bolstering their savings strategies as a result of the disruptions over the past year, with 26% of Americans saying that they are spending more time managing their savings now than they were this time last year.
While it is encouraging to see Americans prioritizing saving, there is still room for improvement in saving smarter.
Most financial experts agree that simple savings tools and habits, like automating savings on a monthly basis, can help people streamline the time spent managing finances while maximizing efficiency. And consumers seem to agree: CIT Bank’s same survey found that nearly three-fourths of Americans (72%) believe that automating savings is an effective tool to help them save time.
For boomers specifically – the second-largest generational group of the U.S. population — our survey unearthed some interesting findings around how they are prioritizing between their time and their money, particularly as we return to normal.
More Time to Manage Finances
According to our survey, 87% of boomers — a greater percentage than any other generation — feel they have enough time to dedicate to managing their finances. This compares with 61% of Gen Z, 78% of millennials and 79% of Gen X.
It’s likely due to boomers having more experience and knowledge about their finances, while younger generations are still conducting research and exploring the best products and accounts to help them achieve their financial goals.
Boomers likely have already established smart saving habits but are looking to optimize their savings further for retirement — an opportunity for them to explore how to best maximize returns on their existing savings.
Balancing Time and Money
Just 36% of boomers feel they are in a “happy place” right now in terms of achieving a good balance between the amount of free time and financial security they have. However, boomers ranked higher than any other generation in this regard, with only 23% of Gen Z, 16% of millennials, and 21% of Gen X reporting that they are in a happy place right now between their time and money.
Retirement is likely top of mind for most boomers, and with retirement comes more time and flexibility in lifestyle. Of course, we’d all like to have a lot more of both time and money. But our survey revealed that between the two, boomers are more concerned with having enough savings to fund their desired retirement lifestyle than with having more free time right now.
Spending Free Time
What would Boomers rather have: More money or more time? The answer is a bit surprising.
When asked to pick between the two, 55% of Boomers say that having more money would most benefit their daily life, compared to 9% who would see a greater benefit in having more free time. In comparison, 25% of Gen Z, 28% of millennials and 23% of Gen X reported that having more time would be most beneficial.
When asked how they would spend their free time, 40% of boomers reported that they would connect with family and friends and 38% would choose more “me time” to spend relaxing, enjoying solitude or exercising.
More than one-third (35%) would start or complete projects like home renovations, and 23% would devote additional hours to developing a skill or turning a hobby into a moneymaking side hustle.
Developing healthy savings habits has always been an important part of cultivating overall financial wellness, but the past year has highlighted the importance of having rainy day and emergency funds to weather the unexpected.
Americans took this lesson to heart and prioritized their savings: Across generations, CIT Bank’s survey found that if they had money, 69% of Americans would put it in a savings account to earn interest or use it to build an emergency fund, compared to just 11% who would purchase a material item.
Though this past year has been difficult and full of hardship, it’s encouraging to see Americans develop more consistent savings habits to save them time and maximize returns.
Ravi Kumar is senior vice president and head of CIT’s Direct Bank. He is responsible for the strategic direction and profitability of CIT’s Direct Bank and focuses on product innovation, pricing and digital experience.