The PEW Retirement Security across Generations study has been the topic of our last two posts. We’ve taken a look at the GI and Silent generations, the early and late Boomers, and an initial look at the Gen-Xer’s.
We also emphasized how important it is to use good information within context—of current and future economic trends as well as individual circumstances. Recent studies have colored the retirement picture of both Gen-Xer’s and Millennial’s pretty dimly. Let’s add a little perspective to those studies, reaching back to 2012 and viewing the opportunities that may lie ahead.
The PEW study notes that, although Gen-Xer’s were hit the hardest by the 2008 crisis, they also participated in the benefits of the housing bubble leading up to its burst. In fact, the study showed that despite the bursting of the bubble, median home equity was higher across segments than before the crisis.
The caveat is that only about two-thirds of the Gen-X generation owned homes. That means slightly over one-third did not participate in the boom because they didn’t own homes.
Of those Gen-Xer’s who did own homes, they gained the most of any other segment in home equity over the two decades prior to the 2008 crisis.
A 2012 study also noted that Gen-Xer’s were more focused than Boomers on ensuring the continuity of their wealth and in providing an inheritance for their children. Over $30 trillion is expected to be transferred to Gen-Xer’s and Millennial’s over the next three decades.
Since early Gen-Xer’s are just entering their mid to late 40s, they still have time to do some effective planning. Many of them already have. What they need to do is to continue to review those plans to make sure their strategies stay on track.
Millennial’s are still in their 20s. Yet they are already thinking about and planning for their retirement. Many are participating in employer-sponsored retirement plans. Thirty-three percent of those aged 18 – 46 have already established long-term care plans for their parents.
Retirement is also likely to look a lot different for Gen-Xer’s and Millennial’s. Who knows what Social Security will look like at that point. And though many Millennial’s plan to continue working during retirement because they want to, the vast amount of student debt may force them to work longer. It also may lull some into waiting until their late 30s and 40s to start planning for retirement.
The Boomer generation is already changing the way people retire. Gen-Xer’s and Millinnial’s are likely to change it even further.
One thing that hasn’t changed is the advantage of planning early. Gen-Xer’s still have some time. Millennial’s have a great deal more time and they should be doing things now to ensure their plans overcome the obstacles pointed out by the PEW and other studies. If you’re a Gen-Xer or Millennial and have concerns about your future, message us, call us at 732.974.3770, email me directly at email@example.com.
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