Key Points
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Switching to the right credit card could put lots of cash back in your pocket.
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Snagging a sign-up bonus is another great way to score free cash.
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If money has been tight, use your credit cards to your advantage whenever possible.
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The baby boom generation is getting older. More and more baby boomers are reaching retirement age and leaving their careers behind.
The problem? A large percentage of boomers aren’t financially ready for retirement.
It’s not all their fault, though.
Boomers started their careers with the mindset that they’d be loyal to an employer, work there for decades, retire, and collect a pension.
In the midst of their careers, a shift occurred. Private sector employers started doing away with pensions, shifting the burden of retirement savings onto boomers who had to adjust to the idea of funding a 401(k).
Now, many baby boomers are retired or are on the cusp of retiring without enough savings.
The Federal Reserve puts median retirement savings among boomers ages 65 to 74 at just $200,000. This is based on 2022 data, but it’s the most current information the Fed has on file.
The problem is that $200,000 is not a lot of money when you spread it out over 20 years or more, which is what some boomers’ retirements might span. And when you consider that the average retired worker on Social Security today only gets about $2,000 a month, it’s easy to see why so many baby boomers are cash-strapped.
The good news is that boomers can use credit cards to improve their financial situations. Here’s how.
Maximize that cash back
If you’re a boomer who’s relied on the same trusted credit card for years, it may be time to mix things up.
If you do some research, you may find that there are different credit cards out there offering far more cash back than what your current card is giving you. That could make a big difference in your day-to-day finances if money is tight.
Say your current credit card gives you 1% cash back on purchases across the board. You might find a credit card offering 3% or more back on key spending categories like groceries. Wouldn’t you rather get more money back on the purchases you make regularly?
Also, you should know that there’s nothing wrong with having more than one cash back credit card. It may be that one card offers bonus cash back on gas while another rewards you more generously for supermarket purchases.
It’s a good idea to have a rotation of credit cards so you’re able to maximize each one’s best perks. Just make sure to keep up with your bills so you don’t carry a balance that accrues interest.
Chase those sign-up bonuses, too
Another thing you can do to improve your financial picture is score lump sums of cash with the right credit card offers.
Many credit cards offer a welcome bonus for spending a certain amount of money within a few months of opening an account. If your spending aligns with a bonus’s requirements, why not snag it?
For example, say you’re eligible for an offer of $250 cash back for spending $4,000 within three months of opening a new credit card. If you typically spend $1,500 a month on your credit card now between gas, food, leisure, medications, and other recurring bills, then you have a great opportunity to take home an extra $250.
Even if you’re not a struggling baby boomer, but rather, one who’s saved well, there’s no reason not to use cash back credit cards to your advantage. As long as you’re able to keep tabs on your spending and avoid landing in debt, switching credit cards could be a very savvy financial move.
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The post Cash Back Goldmine: How Baby Boomers Can Maximize Savings with a Card Switch appeared first on 24/7 Wall St..
