A new report released this week reveals much about both Gen X and Gen Y. Turns out, those born between the mid-60s and mid-70s have only halfway recovered from the recession and have still not rebuilt their wealth.
If Gen Y is worried about covering their bases in terms of paying down debt, then their older counterparts are worried about recouping their losses. And, as the trends have shown over the past decade, being in debt is nothing new for this generation of thirty- and forty-somethings; not having a Plan B is giving us a lot of sleepless nights. The stark differences between Gen X and Gen Y is what’s so interesting.
Went in With Disadvantage
The new report, courtesy of the Pew Charitable Trusts, shows that Americans anywhere between the ages of 33 and 48 lost 45 percent of their wealth during the recession. And as the report explains, and many can attest to:
This is a generation that graduated amid one recession, missed out on the dot-com bubble that preceded it, missed out on the housing boom because it couldn’t scrape together enough cash and was plunged headlong into yet another recession, thanks to the housing bust that followed.
The generation that’s now raising kids and preparing them for college or marriage, has also watched its collective annual net worth spiral down from an average of $75,000 in 2007 to just $42,000 in 2010. That’s certainly a big chunk – about $33,000- but it could be worse.
Gen Y, those born in the late 1970s into the late 1980s, lost a whopping annual average of $75,000, which might explain why they’re more concerned about high credit card debt. That $33,000 loss isn’t nearly as much as the nearly $75,000 lost by the younger generation, but at least that group is still sitting on roughly $170,000 apiece, thanks to the cash it made during the housing booms. The report detailed that not only did Gen X lose out during the two housing bubbles since they graduated high school, partly because of its low rate of homeownership, but that
Gen Xers are the least financially secure and the most likely to experience downward mobility in retirement.
And speaking of Gen Y, another report was released recently, this time, courtesy of Wells Fargo. As mentioned, debt is the biggest problem they report; more than half (54%) say personal debt, including credit card debt, is their “biggest financial concern currently.” Around 42 percent say they are “overwhelmed” by their personal debt. In fact, half said if they had $10,000 to pay on any debt, it would be either or both student loans and credit card debt. For Gen X, 29 percent of them financed their college educations. For Gen Y, however, more than two-thirds financed their college educations – 66% to be exact.
So who are those twenty and thirty-somethings turning for financial advice? Gen Y is far more likely to turn to family members for financial advice. This could be because of their young ages; Mom and Dad, after all, likely instilled financial sense (or lack thereof) and it’s really all these younger adults have know. In fact, a majority (78%) of Gen Y’ers say they learned “a great deal” or “somewhat” from their parents about personal finance.
Young and Naive or Just Financially Confident?
This younger generation is hopeful for the future. Nearly 70 percent say they are certain they will achieve a “greater standard of living” than their parents. Three quarters say they feel as though they’re in charge of their future and destiny and can easily achieve their goals. They also say that if they were handed the proverbial pink slip today, they’d be able to find another position that pays comparably – and they could do this rather quickly.
Apparently, no one introduced them to the very educated MBAs who’ve sent out hundreds of resumes and are still unemployed. They too thought they would be able to find another job after they lost their positions during the recession.
Again, three-quarters of Gen Y who participated in the poll say that hard work for the right company that shares their vision for the future is the best way of getting ahead. The rest feel as though forming their own companies is the way to financial success. Half of them express confidence in their own abilities to earn and save money for their financial future while another 27 percent believe they have plenty of time to save and grow their nest eggs.
It’s not surprising then that 70 percent are “very” or “somewhat confident” that they will be able to save ensure a comfortable lifestyle after retirement. Maybe they should consider this statistic about the older and wiser generation: Unemployed Gen X’ers are still waiting for baby boomers to retire. They’re also realizing it’s not likely to happen as soon as they’d thought and even when it does, they’re then competing with those in Gen Y, who are eager and hungry. At a minimum, someone should tell them that getting the credit card and student loan debt paid off is exactly what their first priority should be; it really is a smoother path to financial comfort. Remember, Gen X and Gen Y are only about a decade apart on average.
Gen X and Gen Y on Education
Also – and this was really interesting, considering the mindset of the younger generation: Nearly half say their college educations are only “somewhat of a value”. Slightly more than one-third say they would have been better off going right into job instead of a college classroom. Sixty percent say an expensive school doesn’t equate to a higher paying job (not in a modern society, anyway) or does it heighten the education they receive.
Those who insist job recovery is easy for people with degrees might want to reevaluate that statement. They also say the divide is widening: those with degrees and high paying jobs and the rest of the population in minimum wage jobs. Both Gen X and Gen Y had very definitive “rules” they played by after graduating high school. No one believed they’d be poles apart, though.
As someone who’d be classified as part of Gen X, hindsight truly is 20/20. All of those John Hughes’ teen movies that dominated the 1980s were ahead of their time. Any forty-something can remember the themes that ribboned those teenage angst storylines: rich boy and poor girl stand up to society. Or how about a library full of high schoolers, complete with their labels: the jock, the princess, the geek, the freak – Hughes was on to something. He just couldn’t have anticipated how his art would indeed imitate life just a few short decades later.