Posted on 06/21/2018 2:19:46 PM PDT by rickmichaels
Lately I’ve 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 they’re 50, they often dress or party as if they’re 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 don’t want their finances. That’s because the wealth gap between generations keeps widening, and their children’s 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 it’s 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, it’s 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.” That’s pretty bad news for twenty and thirtysomethings who may have been hoping to catch up. But it gets worse.
By 2034, Social Security won’t be able to pay out full benefits, the program’s 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 College’s 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. Slate’s Jamelle Bouie called it “a great example of ‘we turned the economy into a miserable hellscape and you’re just going to have to deal with it.’”
Ouch. But Munnell assured young people that they don’t 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 doesn’t 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? Won’t 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 aren’t 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 can’t 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 that’s 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 it’s 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 they’ve 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.
It’s 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 you’re 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.
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The ‘escape’ is improbable if you have no tools.
That is the whole point of Common Whore.
They’re trying to guarantee a huge underclass to keep themselves in office.
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I came of age in the 70’s. It was like the world was coming to an end at times. And the decade finished out with 4 years of the idiot, Mr. Peanut.
Thank God for Reagan.
Number one, they should never borrow money for school. My boomer siblings that went to college all worked their own way through. The rest of us went straight to work from high school. Our depression era parents had no money to put us through college. Most jobs don’t require a college degree anyway. Youth is wasted on the young. College is wasted on the youth.
Number two, the country should’ve never let itself sink into socialism. The welfare state is a big loser in the long run. We boomers learned from our parents the value of hard work and that there’s no such thing as a free lunch.
Number three, the country should’ve never legalized abortion. No wonder we have fewer workers today. We killed off a generation or two before they were even born. And importing armies of cheap foreign labor destroys a country rather than build it. Ask the Roman Empire. Ask Europe. Hell, it’s happening right here, right now.
Number four, we should’ve never kicked God out of school and put government in. Government is a very poor substitute for God or parents. When it takes a village to raise a child, you end up with the village of the damned. Or village of idiots. And that’s where we are today.
When we the people gave up our Judeo-Christian heritage, roots and principles and turned to big government to solve our problems, we literally paved our own road to hell.
Mine went to college and got degrees in STEM fields and are doing very well for themselves.
My son(28)’s *debt* is in his second house in the form of a mortgage.
My daughters are not in debt. They have learned how to manage their money and are managing to save even when things are tight for a month or so. But they live within their means.
Be careful.
My nieces were the same way till they went to College.
One is normal but the other is full on SJW.
My own experience as a late 40-something. I had about as bad a Great Recession as you could imagine. It completely wrecked my finances. I piled up debts and wiped out my savings (thanks Obama). However things got better about 2 and a half years ago and there was a much bigger uptick within the last year. My income is up 20% (thanks President Trump). I now have to turn down opportunities I would have killed for 3-10 years ago. I may be able to take another big step forward in my career if things keep going like this. At the present rate, I’ll be mostly out of the hole the Obama economy put me in in about 2-3 years. That would have been simply unimaginable a few years ago.
Social Security will go bust right about when I’m in my mid 60’s at current projections so I will have paid into it my whole working life and will have the rug pulled out from under me just as I get to the finish line......but I knew that would be the case back in the 1990s. All my friends did. I don’t think any Gen Xers who had a clue were ever counting on it being there for us. It certainly won’t be there for millenials.
They have bought into the Democrat lies that their problems are the fault of someone else. They haven’t figured out that they have been lied to yet.
The economy is booming, Boomers and older generations were faced with up t0 90% Fed income taxes, the draft, and MAJOR RECESSIONS, but still managed to save for retirement, beyond Social Security. They also got married, had kids, and didn't live with mommy & daddy into their 30s.
So grumble away, you wet behind the ears babies, or, you could go out and actually get an entrance job, live within your means, and pay of your loans, for the really STUPID majors they funded.
“We baby boomer types, paid sharply higher social security taxes all these years, in order to fund social security payments in our futures.”
Not true. The baby boomer paid higher SS taxes to fund the “greatest generation’s” SS benefits since it is a pay as you go system. The greatest generation received far more than they paid in but that isn’t sustainable for the baby boom generation’s benefits. This is one area where the greatest generation wasn’t really all that great.
wait til they find out that mom and dad effed thins up so much that the last generation of savers (the Boomers like grandma and grandpa) didn’t leave them squat.
Join the Nav,CG or the AF ,learn a trade and let the GI Bill pay for more training if you even need it for a firm to pick you up
Total bunch of horse hockey.
Sure, if you are $20-100K in debt for a degree that isn’t applicable to where the jobs are and expect (or borrow to) spend at a level way above what you’re making, you are hosed. Too bad.
Work hard, spend less than you make and screw the ‘self actualization’ and instead work at what pays well and you’ll be OK.
This is a demographic situation and no government tweaking would have taken care of it.
Good for you; as a good CONSERVATIVE, you raised him right ( both meanings of that word! )! :-)
bkmk
This won't work if left-leaning millennials and Gen-Xers double down on stupid, which seems to be the way they are trending.
But the dems will lead them straight down the path to disaster, pursuing the theory that penalizing success, subsidizing slackers, and prioritizing redistribution over growth will, this time, succeed. I.e., double down on stupid.
I had no inheritance from my parents. Most of the equity in their house went to pay for her residence at an Alzheimer's care facility during her last two years. What little remained went to a younger brother.
My goal in life, arrived at over 30 years ago is simple: to grow old (older???) and not be bitter over how my life turned out, missed opportunities, $hitty jobs, rebellious kids...you know, it's called life.
So far, so good. Just turned 64, retired at the end of last year. Wife just retired last month, and she's freaking out over the reduced income. I had to sit her down and go over our finances, and it got her off the ledge.
To stay busy, I took a part time job at UPS in their package sort operations at DFW airport. The major benefit is not the extra income, it's the physical activity. Over the past four months, I've dropped 20 pounds and my BP is now considered ideal (104/64).
We did a lousy job of saving money, but raising 3 kids had a lot to do with that (I'm not blaming them, though). With my life insurance and home equity, each will receive an inheritance of over $150,000.
I was tempted to go with a reverse mortgage on the house, though it's my ace in the hole if they really piss me off...lolol.
Allowing the public sector employees to unionize killed us all.
The only ones even offering pensions at this point are employers in the public sector.
The private sector found out long ago they couldn’t handle the load.
California is in very bad shape. Calpers is a mess.
“struggle to find affordable homes within commuting distance of their jobs”
Homes were far more affordable before the Big Zero took office. Who voted for Big Zero? Younger folks!
Homes are still affordable outside of glamour areas.
As for paying for Social Security for older folks, the younger folks had better think about who paid for their $12,000/year on average K-12 education.
About half of many old folks’ Social Security will go to pay school tax for the younger folks’ new folks.
I envied the older folks who paid ~$30,000 for a big detached house in Fairfax County, VA.
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