Common sense says it’s no surprise that older Americans are wealthier than young Americans. Simply put, they have had more time to develop a strategy, learn from their mistakes, and build long term wealth. However, would it surprise you to hear that young Americans today are doing much worse than young Americans 30 years ago?
According to the Pew Research Center, households headed by the XY generation are worth 68% less than their counterparts 30 years ago. In 1984, median net worth was $11,521. In 2009, it was $3,662. The age based wealth gap has gone from a 10:1 ratio to a 47:1 ratio.
These numbers seem pretty shocking, and the easy culprit would be to point at the recent problems with the economy. However, there are some pretty interesting long term trends we can look at to see why the economy may not be the only reason:
Overwhelming Forces Urge You Not to Save – every day, everywhere you go, there are forces working against your ability to save. Advertising is more effective and insidious. Consumerism is attractive to young Americans because the products available today “seem” to make our lives easier, and that serves as legitimate justification for buying them. The problem is that we are not saving money. 42% of Americans live paycheck to paycheck. We need to find a way to make saving fashionable again.
Changes in the Job Market – this point is rather ironic. Because our parents did a much better job at saving money than we do, they were able to send a lot of us to college. However, there are more college graduates now and less jobs to put them in. This means more competition and more underemployment, which also makes it harder to save.
Housing Values – decades ago our counterparts purchased their homes at pre-bubble prices and were able to build more equity. Prior to the Fannie/Freddie collapse, lots of young Americans purchased houses during the bubble, and they have less equity than they would have 30 years ago. Add to this the fact that “owning a home” is not necessarily part of the American Dream anymore. It locks you to a certain area and prevents mobility, which is not attractive to the younger generation these days.
More People are Single and Waiting to get Married – Over the past 30 years, the average age that people are marrying has increased. Obviously, two incomes are better than one, but the key point here is when marrying older, you have less time with two incomes than our parents did years ago. This means that the priorities of young Americans today are much different than the past. Single people need a plan for down the road just like married couples.
Develop financial goals for the future, no matter what your situation is. Write them down, and that will make them more tangible. The more money you put away today, the sooner you can make work optional in the future.
Call oXYGen Financial at 800-355-9318 or request a FREE consultation at www.oxygenfinancial.net to help you reverse the trend and make sure you don’t become a statistic! oXYGen Financial is the best Gen XY firm in the country.
Story Provided by Daniel Taylor, Director Of Brokerage Sales at Guardian Financial
