Skip to comments.Millennials waking up to grim financial future left by baby boomers — and they're angry
Posted on 06/21/2018 2:19:46 PM PDT by rickmichaels
Lately Ive been losing track of how old everyone is. Friends, co-workers and family members are resisting middle age with vigorous exercise, careful diets and regular doctor visits. Even when 50-year-olds look like theyre 50, they often dress or party as if theyre still in their twenties.
Our capacity to fetishize youth never ceases to amaze. But while older Americans definitely want to look like younger folks, they certainly dont want their finances. Thats because the wealth gap between generations keeps widening, and their childrens future is beginning to look ugly.
Just two years ago, the median American born in the 1980s the cradle of millennials had family wealth that was 34 per cent below what earlier generations held at the same age, the Federal Reserve Bank of St. Louis reported last month. And all the data show its probably going to get worse.
As affluent baby boomers thank years of soaring markets for their paid-off mortgages and plump portfolios, millennials and the next cohort, Generation Z, are weighed down by student debt and stagnant wages. They can only contribute the bare minimum to their retirement plans and struggle to find affordable homes within commuting distance of their jobs.
Of course, its perfectly normal for people just starting out to have less in the bank. However, the St. Louis Fed warned that, even when taking that into account, young Americans are slipping dangerously behind. For a time, Generation X was also losing out, thanks to the 2008 financial crisis. But its members managed to make up most of the shortfall in the years since, tapping into the longest economic expansion in decades.
For some reason that period of tremendous growth barely helped millennials. The St. Louis Fed called this anomaly a missed opportunity because asset appreciation is unlikely to be as rapid in the near future. Thats pretty bad news for twenty and thirtysomethings who may have been hoping to catch up. But it gets worse.
By 2034, Social Security wont be able to pay out full benefits, the programs trustees estimated this month. Any solution that would rectify its finances will probably require more taxes and more benefit cuts all coming out of the pockets of younger workers. Boomers, who are exiting the workforce in droves, will already be comfortably seated when the music stops, or out of the picture.
Fixing Social Security is hardly the only issue where younger Americans have different priorities than their elders. U.S. President Donald Trump was elected on the votes of older Americans favouring tax cuts and less government, while young voters flocked to Senator Bernie Sanders, who supports rebuilding social programs and establishing national healthcare.
Alicia Munnell, the director of Boston Colleges Center for Retirement Research, recently lamented that government inaction on Social Security means that most baby boomers have escaped completely from contributing to a solution. This month, she offered some depressing advice to younger Americans about what they can do to make up the difference: Work longer.
The reaction to her earnest advice was rage.
Wait, this is the good news? read one indignant post on Twitter, echoing many others. Slates Jamelle Bouie called it a great example of we turned the economy into a miserable hellscape and youre just going to have to deal with it.
Ouch. But Munnell assured young people that they dont need to cancel their retirements entirely. In fact, my research shows that the vast majority of millennials will be fine if they work to age 70, she wrote for Politico. (Small solace given that life expectancy for Americans recently took a turn for the worse.)
Still, Munnell has a point. Across a generational time-frame, people are still living much longer than their parents. As my colleague Peter Coy recently pointed out, a man who is chronologically 65 is actually more like a 55-year-old from the perspective of 1957. With the extra years, a longer career doesnt necessarily mean a shorter retirement.
Retirement-age Americans are already working in record numbers. Whether by choice or necessity, because of boredom or fear, a full third of those between 65 and 69 were in the workforce in May, according to the Bureau of Labor Statistics, along with 19 per cent of those aged 70 to 74 together almost double the number 30 years ago.
Nevertheless, the retirement advice of just work longer can sound pretty tone deaf to younger ears, especially when the old American promises of advancement, financial security and home ownership for everyone who works hard have faded into myth.
What about the booming economy of 2018? Wont that help smooth the path for young savers? Perhaps, but Goldman Sachs Group Inc. economists recently said the current pace of the U.S. economy is probably as good as it gets. That can only make young Americans more furious about the missed opportunity mentioned by the St. Louis Fed.
Paycheques arent reflecting the improving economy. Hourly wages were unchanged in May from a year earlier. And according to a Fed survey, four in 10 Americans said it would be tough to come up with US$400 for an emergency expense. The same 2017 survey found 27 per cent skipping medical treatments because they cant afford them. Another poll this month reaffirmed the inability of many Americans to save any money at all.
So work longer? First you have to live longer, and thats not guaranteed.
Wide swaths of the country are getting sicker and dying younger than just a few years ago, with a widening health gap between educated, affluent Americans and everyone else. Alcohol abuse and obesity, upticks in suicide and an epidemic of drug overdoses have all played a role in an ominous milestone: Year-over-year declines in American life expectancy while the rest of the world lives ever-longer.
Perhaps its a statistical blip. If not, the U.S. faces an almost dystopian future one of hyper class-stratification in which the few are rich and living longer while the many postpone retirement, struggle to get by and ultimately die younger.
There is some good news for younger generations, though. As they focus on the hand theyve been dealt, they will find there is one good card to play, one that may allow them to address the myriad problems they face: numbers.
Its no secret the widening gap in financial security is shadowed by a similar gap in politics, setting up the potential for generational warfare at the ballot box in coming elections.
The outcome of the 2018 midterms may largely come down to whether left-leaning millennials and Gen-Xers, who make up a majority of eligible U.S. voters, show up. In recent elections, these two demographics voted at much lower rates than previous generations at the same ages, according to the Pew Research Center. Unless that changes, wealthier, right-leaning baby boomers and the remaining members of the so-called Silent Generation will once again swamp them at the polls.
Regardless of turnout, or even who wins, academics predict a growing animus between young and old to match the polarized party politics currently roiling the nation.
I think youre going to see growing conflict, said Susan MacManus, an emeritus professor of political science at the University of South Florida. One sign that this huge generation is awakening to things is that we have seen record levels of younger candidates stepping up to the plate and running for office at every level, she said.
And she said these young people, just now realizing how bad their prospects are financially, are increasingly angry.
It's been said that eventually you run out of other people's money. Today's young people are the "other people".
My son is 15.
He follows Fox and the Market.
Thinks his classmates are all retarts.
Has a group of conservative friends.
He carried a 3.97.
Plays marching Sax and concert Obo.
Brilliant little fkr.
And who are these angry millennials voting for?
“...wealthier, right-leaning baby boomers and the remaining members of the so-called Silent Generation will once again swamp them at the polls.”
Damn Skippy we will.
Now you kids get back to get back to work! ;)
Living together instead of being married, and especially having children out of wedlock, contributes to worse life outcomes for both adults and children. Illegitimacy is 40% nationally. The breakup of the family for Boomers and failure to form new ones for their children is tied to worse life outcomes for all involved.
Families are the real issue for opportunity, not inequality
Monogamy reduces major social problems of polygamist cultures
Says one of the people who HELPS create the "conflict."
So why do they keep voting for Democrats?
They are just as much to blame.
That is it, in a nutshell! My two went to Tech college. They are gainfully employed and not living in my basement.
(And they never will be!)
that’s about right except a good trade takes about two years and if you get in a union apprenticeship program you are debt free. The unions are looking hard for folks as people are are not as interested in real work as they use to be. When I was young you had to know someone to get an apprentice position, not anymore.
Good for him!
Millennials largely made the decision of affluent children to study acting or women’s studies or whatever they felt would help to actualize themselves at expensive private colleges because they were indulged by Boomer parents with plentiful resources and relatively few children to divide them among.
Surely it is not the fault of another generation if those grads don’t find the job market as easily rewarding as has been 30 years on their Boomer parents’ dime.
My millennial daughters are all doing quite well (better than Mom and Dad), thank you, because they selected universities without high price tags and took on minimal student loan debt. They also chose courses of study which produced degrees which are actually marketable and married men who did the same.
One of my sons-in-law actually skipped college altogether and went into a vocational trade where he gets his hands dirty but brings home a bigger paycheck than most college graduates. Imagine that!?
They should find solace in the “fact” that climate change will kill them before they get old and need those retirement savings.
My first job was in a recession and the pay was lousy. I did it because I had to get work experience. I didn’t blame the greatest generation for my problems. It didn’t even occur to me!
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