When issues regarding personal wealth and sustainability are at stake, the war between the generations can grow fierce. Currently some of the most passionate conversations about the matter are focused on the baby boomers versus the millennials. Some people declare that the millennials are hopelessly self-centred and practically a lost cause but have only themselves to blame, whilst others insist that millennials are a noble but doomed generation because the baby boomers’ greed and selfishness have plundered their future. Instead of focusing on the advantages of being either young and healthy or older and presumably wiser, the respective generations often squander energy complaining about how hard things are for them and how good the other generation has it.
So who’s right? Have the baby boomers stolen the future from the millennials? Or are the millennials just a lot of selfish and lazy whiners who refuse to take advantage of the opportunities with which they’ve been blessed? As usual, the truth is much more nuanced than either one of these extremes.
Lucky boomers? It depends on how you look at it.
By some metrics the boomers win the good-fortune contest hands down, at least when viewed superficially through the lens of “haves” vs. “have-nots”. Due to the recent freeing up of pension funds, people aged 55 and over have the chance to access more of their money and boost their property and investment portfolios, leaving younger generations to cover the cost of long-term care. Research by the Financial Times indicates that people aged 65 to 70 can expect to be in the top 40% of family incomes in the country, and the research concludes that older people are now better off than young adults.
Millennials on the other hand are struggling, and some pensions experts say they will struggle even more in later life as they face poorer retirements due to lack of ability to earn or save enough to replace a decent percentage of their income in retirement.
Yet the “victory” apparently being won by baby boomers is a superficial and transitory one at best; if things keep going the way they are nobody will be a “winner” in the war.
Is the idea of “boomer privilege” just a myth?
If you ask certain leading age campaigners, such as the Ready for Ageing Alliance, Age UK, the Alzheimer’s Society, Carers UK and Centre for Policy on Ageing, they’ll tell you the baby boomers have been unfairly maligned. These advocates insist it is a “myth” and a “lazy generalisation” to claim that over-55s have it all and that they got rich at the expense of the young.
The gloomy truth is that many boomers are struggling financially and don’t have money to burn – far from it. Not all are even homeowners; one quarter are renters. Many are dealing with health problems, either their own or those of elderly parents. Some are also helping out adult children who are also struggling with money. Many boomers are cash poor and may have to borrow against their homes to fund costs. In short the golden years are not so golden for millions in the post-WWII generation.
A big problem is that many of those nearing retirement simply don’t have a big enough pot and they’ve run out of time to add to it. In some cases this is a result of poor planning, but some saw their assets eroded during the financial crisis and have never been able to replace what was lost. Moreover many folks who are still a few years away from retirement seem to have no realistic idea of how much they are really going to need.
On the other hand, millennials appear to be assimilating the message of the need for retirement planning. Auto-enrolment into workplace pensions has given a boost for people aged 25 to 34, with some reports indicating that almost half of young people are saving through their employer and another nearly 10% are saving privately into a pension. Of those who are saving, 61% have an idea of how much their pension is worth. There’s still much room for improvement but it’s a hopeful sign.
Expect the unexpected, and stop scapegoating.
One tough lesson that every generation learns sooner or later is that no matter how well one might plan for every plausible contingency, life is full of unpleasant surprises such as illness and job loss. As well, larger events beyond individual control can set some of our best-laid schemes askew; not to mention decimating our savings or retirement funds. Any one of us could at some point find ourselves strapped for cash with very limited income opportunities. So it doesn’t pay to become complacent no matter what our age or how well prepared we think we are.
If you do find yourself in a corner, don’t get panicky. There’s almost always a way out of even the stickiest money bind and it won’t necessarily be in the form of a new investment opportunity or a dream job offer, and probably not a big sweepstakes win either. You might need to resort to borrowing to help you through rough times; there’s nothing wrong with that as long as you are a responsible and informed borrower. Research the types of loans available and take the time to comparison-shop to get the best deal. Then focus on paying off your debt and working towards better days. They’ll get here. They always do.
Apart from managing our money responsibly and avoiding complacency, one constructive step we can all take is to listen to each other more and learn to reach out across the generations. We need to stop scapegoating; after all no single generation has or ever has had a monopoly on either nobility or depravity (or on good music, for that matter). We are simply human and as such we’re a mixed bag – and we can all learn from each other.
[tweetthis]A look at the #moneywars between Baby Boomers and Millennials[/tweetthis]