Rachel Christian | (TNS) Bankrate.com

Most baby boomers — those born between 1946 and 1964 — are now in retirement. While many have enjoyed successful careers and comfortable lifestyles, others find themselves in a less-than-ideal financial situation. A common regret among this generation is not saving more for their golden years.

According to Bankrate’s 2024 Financial Regrets survey, 37% of baby boomers (ages 60-78) say their biggest financial regret is not saving enough for retirement. Of participants in the survey, it was the most commonly cited regret by far.

By examining the financial regrets and successes of baby boomers, younger generations can learn from their good habits — and steer clear of their bad ones.

Here are the five biggest lessons younger generations can learn from baby boomers — and how to implement these good habits into your own life.

If boomers could go back and do one thing differently, many would start saving for retirement earlier.

Saving for retirement might not be top of mind when you’re just starting out in your career, but thanks to the power of compound interest, it pays to start early. Every dollar you save today has the potential to grow exponentially over time.

A simple compound interest calculator reveals how small but consistent contributions magnify over the years.

In 10 years, you’ll have saved $15,323! Not bad for $100 a month. Now imagine you stretched that timeline to 40 years. When you’re 65, you’ll have $95,921 saved — and only have contributed $49,000.

Now imagine your friend, Mark, starts saving 10 years after you, when he’s 35. He makes the same $1,000 deposit and contributes $100 a month, earning 3% interest compounded monthly.

In 30 years, when he’s also 65, he’ll have just $60,730 — less than two-thirds of what you’ve saved — and have contributed $37,000.

That’s the power of compound interest and consistent saving.

While saving money is great, investing your cash in assets such as stocks, mutual funds and ETFs is a tried-and-true way to build wealth for retirement. About two-thirds (63%) of U.S. adults age 65 and older owned equity through individual stocks, mutual funds or retirement savings accounts, according to an April 2023 survey by Gallup.

While short-term stock fluctuations are common, stocks have the potential to generate substantial returns over the long run. The S&P 500, a widely tracked index, has historically delivered an average annual return of about 10%. Compare that to even the best high-yield savings accounts, which fetched a return of about 5% in November 2024.

Successful investing isn’t a one-time event. Regular contributions to your investments, known as dollar-cost averaging, can help reduce market timing risk. By spreading out your purchases, you’re less likely to buy at peak prices, allowing your wealth to grow over time.

Plus, investing is easier and more accessible for younger generations than it was for baby boomers. Here are some simple steps you can take to start growing your portfolio.

Boomers grew up during some prosperous times, and many enjoyed strong salaries and career stability — but overspending can catch up with anyone. It’s easy to let lifestyle creep set in, where each raise goes to nicer cars, bigger houses and fancier vacations instead of your bank account.

Learning how to live below your means today can help you save more money for tomorrow. The first step is getting a handle on where your money is going.

To effectively manage your finances, consider the 50/30/20 rule. This approach suggests allocating 50% of your after-tax income to needs, 30% to wants and 20% to savings or debt. Budgeting apps can help you track your spending, identify areas to cut and stay on track with your financial goals.

Here are other tips to help you live within your means.

Since the 1990s, older Americans have increasingly carried debt, according to 2023 research from the Center for Retirement Research at Boston College. While mortgage debt accounts for a large portion of this increase, other forms of non-secured debt — such as student loans, medical debt and credit cards — have also risen among older adults. This trend is especially concerning for financially vulnerable households.

And when it comes to financial regrets, 13% of baby boomers say they regret taking on too much credit card debt, according to Bankrate’s Financial Regrets survey. Credit card debt was the second most commonly cited regret by boomers behind not saving earlier for retirement.

Eliminating high-interest debt before retirement can put more wiggle room in your budget, especially when you’re on a fixed income. Here are some things you can do to pay off credit card debt.

Health care costs have hit many baby boomers hard, especially as they’ve gotten older. Many learned (sometimes too late) that skipping routine care and insurance and not planning for long-term care can be costly mistakes. Fidelity estimates that a 65-year-old retiring in 2024 will spend an average of $165,000 on health care costs in retirement.

While Medicare, the federal health insurance program for people 65 and older, covers many of your health care costs in retirement, it doesn’t cover everything. It isn’t free either. So planning ahead for medical expenses now can protect your nest egg down the road.

Here are a few things you can do to prepare for medical costs in retirement.

Baby boomers’ biggest financial regrets offer valuable lessons for younger generations. By saving early, investing wisely and living within your means, you can build a strong financial foundation and enjoy a fulfilling retirement.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

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