Younger Generations and the Prospect of Retirement

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The main headline on the Drudge Report this morning read "Recession ‘Lost Generation’" and linked to an Associated Press article written by Hope Yen discussing how the Great Recession is affecting young adults. Yen: "In record-setting numbers, young adults struggling to find work are shunning long-distance moves to live with Mom and Dad, delaying marriage and buying fewer homes, often raising kids out of wedlock." Recent numbers from the 2010 census suggest that the Great Recession is having a debilitating and damaging impact upon young people in the US.

According to Yen, the census numbers highlight "the missed opportunities and dim prospects for a generation of mostly 20-somethings and 30-somethings coming of age in a prolonged slump with high unemployment." The article suggests that these factors may result in a "lost generation" for many. The unfortunate state of the US economy in light of the Great Recession’s impact on young people spirals into other cultural and socio-economic aspects. Where many young people do not have jobs and are living with their parents, young people are not as likely to get married, have children, and buy houses. To say the least, the situation is precarious.

On Sept. 15, Bloomberg’s Dune Lawrence and Nora Zimmett reported on how members of Generation X (Gen-X), or the "46 million Americans born between 1965 and 1978", are having trouble competing with baby boomers for jobs. According to the article, over a quarter of Gen-X Americans are working longer hours; a little under 75% of Gen-X Americans are making career choices based on credit card debt. Owing to socio-economic factors like education and health care issues, it is as if Gen-X Americans have had "no welcome in the economy". Stuck between baby boomers and the "echo boomer" millennials of Generation Y (Gen-Y), the article suggests that Gen-X is facing considerable adversity in terms of career status and looking forward to the prospects of retirement.

And speaking of the prospects of retirement, US News & World Report’s Emily Brandon recently reported on how Gen-X and Gen-Y Americans will "need to save considerably more than the baby boomers to make up for less employer and government help". As a result, a Gen-Y American is going to have to save up about $2 million for retirement. (But how much is $2 million today going to be worth in ameros?) Further, the article states that Gen-Y Americans should not plan on retiring at age 65. Brandon: "If you’re 25 now and willing to work until age 70, you could reach $2 million by saving just $95 per week, assuming an 8 percent annual return and not even counting the 401(k) match." Only $95 per week? Wow.

I am not certain as to how feasible an 8 percent annual return is today or will be in the future, but Bloomberg’s retirement calculator appears to verify this projection. One also has to wonder how inflation would impact this $2 million price-tag, but Brandon advices young people to not "get hung up on the number". Nevertheless, if you are 25, unemployed with your Bachelor’s degree, and living with your parents, I am not too sure what $2 million even means at that point. If you are 25, unemployed, and living with your parents, the price tag for retirement might as well be a hundred kajillion bazillion dollars.

Even so, aside from the sheer numbers, let us suppose that a Gen-Y worker will be retiring sometime in the 2050’s. I ask you: What the hell is the planet Earth going to look like in the year 2050? What is American society going to look like in 2050? What crises will the globe be reeling from at that point in time? A water crisis perhaps? Overpopulation? Famine? War? Disease? Euthanasia? We can attempt to crunch the retirement numbers for Gen-X and Gen-Y ceteris paribus, but the simple fact is that things are constantly changing and never remain the same.

The elephant in the room with respect to this discussion goes back to the baby boomer generation. This demographic bulge in the belly of a snake is proving to be a substantial bane for just about every other generation in its chronological vicinity. In particular, for Gen-Y and Gen-X, the baby boomer generation appears to be having an adverse impact on generational economic standings in terms of education, career, marriage, child-rearing, and retirement. Unfortunately, it would not surprise me if in the near future someone were to write a book arguing that the baby boomer generation is the "worst generation in the history of the universe".

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© 2011 Benzinga

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