A Fed study on the Demographics of Wealth explains How Education, Race, Birth Year Shaped Financial Outcomes.
The study covers the long last-lasting wealth impacts of the Great Recession on young families. The article’s first subtitle reads “Lost Generation?” but the charts show it’s more like “Lost Generation!“.
The study did not break down the results using names of generations. Here are the ones I used in anecdotes on the Fed research charts.
The above image clipped from New Guidelines Redefine Birth Years for Millennials, Gen-X, and ‘Post-Millennials’
These charts caught my eye, as related to millennials, from the Fed study.
Change in Median Income
Wealth vs. Predicted Wealth
Change in Wealth Levels
Conclusion
The study concludes: “It is far too soon to know whether families headed by someone born in the 1980s will become members of a lost generation for wealth accumulation. To be sure, there are grounds for optimism. Yet there are reasons to be very concerned about the financial outlook for many young Americans.”
Odds are another recession is on the way. It will not be put off forever. Millennials who went deep into debt to buy a house will likely find themselves underwater.
The stock market is insanely overvalued.
What about education debt? Healthcare? Pensions?
Millennials who already overpay for healthcare will be under increasing pressure to pay more into the system as costs soar out of hand.
Millennials stand to get screwed on absurd pension promises made to their parents.
Inheritance
One potential saving grace is boomers will die and millennials will inherit their parents wealth. But that wealth most likely will have to be split among many siblings. And many boomers will die broke. Thus inheritance will be be very skewed. The median inheritance is likely to be a pittance.
Screwed Generation
On April 26, I commented Millennials, the Screwed Generation, Blame Boomers For Making Their Lives Worse.
There are plenty of reasons to think a major political upheaval is coming. If so, will the result be any good?
Mike “Mish” Shedlock
Unless one plans on dying in the next 10-15 years, most everyone will be severely impacted by the coming sovereign debt crisis, which will have a devastating impact on the treasury IOU’s in social security, and the govt bonds in pension plans. Those believing that stocks will crash will also get crushed when they run for cover in govt bonds. Those that own stocks in “street name” or hide their gold in safety deposit boxes will also have their beliefs shattered when govt comes calling for what they “need” to save the country. Look at the fine print on your safety deposit box. You are only allowed to keep documents, not cash or gold, which can now be confiscated since govt considers it money laundering to hide money from the government. Also, look at your bank statements where it makes it very clear you are a lender to the bank and thus required to do your due diligence when loaning money. No, you won’t get a bail-out, but a bail-in, and FDIC insurance will be meaningless in a systemic crisis. Buyer beware.
And if you think the massive amount of wealth parked in IRA’s and 401k’s will be safe, think again. Govt / Socialism is collapsing under its own weight, and govt’s will act like a cornered rabid dog, as they attempt to hold on to their perks and power. As demand for govt debt collapses, they may give you the option of taking treasuries in exchange for your stocks as a token appreciation for your contribution in saving Amerika. Why do you think they want to confiscate guns so badly? Stocks in “your name” will continue to be the safe-haven until the end of the public to private transition in 10-15 years.
Painting the Boomers as self absorbed, spoiled rich folk, who ruined the world is a pretty inaccurate stereotype, albeit, one that bitter ‘don’t haves’ use frequently. However, as a Boomer, I do believe that the advent of high housing prices, medical costs and student loans is creating a generation that will be poorer and less able to achieve the lifestyle of the Boomers in the future. Perhaps it’s silly, but I blame the politicians, bankers and boardrooms for only focusing on the short game while knowing full well that there would be grave generational consequences. I don’t really see it as a generational thing, politicians, bankers, and management come in all generations. No one generation has the corner on being selfish and self-absorbed. Of course, it takes time to get to positions of power so it appears to be a ‘generation’ issue— I’m doubtful the Millenials will do any better and I suspect that’s also why we see the trend toward socialist ideals. They’re just out to ‘take’ what they didn’t get handed to them already. Such an approach is not any more nobler than the Boomer approach…
Probably better to endure the buffoons but there are some who go over the bounds….
It is primarily consumption based. Boomers don’t want to lower their standard of living materially by being more efficient and sharing with the future generations, which is extreme negligence. The other extreme manifests to balance things out, which is younger generations not wanting to be a part of the consumer culture. Therefore, they don’t buy things, and don’t want to participate when rent is more than 2 weeks pay. So they develop the alternative, which is the tiny house lifestyle metaphorically.
Boomers don’t know what to do with Leisure, preferring to gluttonize and party rather than develop consciously. Younger folks get lots of Leisure time with the internet to learn to be more efficient and sustainable culturally. The new arrangement actually works for both generations. Unless they start fighting.
This was decided when SS was established. There was no bank big enough to keep that kind of balance, so it was decided to buy government bonds. There was never any intention of the government hoarding cash, only to issue IOUs+interest from day one. It should work well enough in a fairly static world (or at least one with slow population growth, fixed lifetimes, and stable employment), but that’s really never been the world we live in. And of course the fact that the first generation of recipients received far more in payments than they contributed, meant Social Security is doomed.
Leave, them, it’s hilarious to see people’s comments when they are incapable of reaing and understanding a chart of data.
There, fixed it for you Mish.
Millennials stand to get screwed on absurd pension promises made to their parents who work or worked in the public sector.
It might have helped if the government didn’t spend the money in th social security trust to fund their deficit spending. That money would be there if invested and kept in a “lock box”, and should have been enough to fund the boomers benefits. Now its a ponzi scheme.
As long as the so-called “wealth” the boomers have “accumulated,” amount to little more than claims on the current and future earnings of younger generations, how could those latter generations not end up being screwed?
It’s not as if boomers have spent their lives as miserly savers; spending only a fraction of what they have earned, while setting the rest aside in a “wealth accumulation” piggybank that they can now draw down.
Instead, their accumulated “wealth” reside in no more than various riffs on the scheme of sitting around making promises to eachother; stating that someone else’s kids are to pay them lavishly in the future. Then crossing their fingers and hoping that the saps following them will have lapped up enough indoctrination and propaganda, to fall for the currently fashionable scams that “rule of law” and “democracy” are some sort of sacred universals, even once all external, timeless constitutional constraints on either lawmaking or law interpretation are completely wiped away.
Well said flubber
BFWR was a broken record, only skimmed his posts since they (and the replies they generated) became repetitive quickly. Remember Nock but not much about what he wrote. VegasBob seemed a good guy, hope he’s in remission now. TinHat was a great poster and the only female regular I can recall.
I think Fedwatcher hung around longer than the rest but dropped off at least a year or two ago. He seemed to be doing fine.
100% agree. However, the substance of Brandeis’ opinion applies whether the censorship is State or private. The only thing more important than freedom of expression is ownership of private property.
First do no harm, then do as you please Mish.
You also forgot about BFWR and Albert J. Nock. Yeah, those were the good times back then.
I have been reading this blog for years, for the articles, and for the Libertarian style of not censoring the comments. I also miss the crazies of the past on this blog, as no one really knows how to fix the mess we are in, so the gamut of viewpoints is very healthy. There was always a magnanimous air of intellectual respect that has faded to a yawn here on The Maven, which hogs too much CPU in my opinion.
Ken Wilber has a great book called “Boomeritis” that predicted much of the world we live in today mostly by the Narcissism and Nihilism that is the culture of the consumer Boomer. I heard it was asked if a Millenial would prefer a McMansion without internet or a one room shack with it, and they overwhelming picked the latter. It was stated above that Boomer parents should force their Millenial children out of the house to work manual labor. This attitude undermines what is actually going on with the Boomerang, that is, that value is being kept close to home, repairing lonely family dynamics and isolated humans who are socialized to be individual purchasing units. There is much work to be done, yet much of it is cultural.
I have been reading this blog for years, for the articles, and for the Libertarian style of not censoring the comments. I also miss the crazies of the past on this blog, as no one really knows how to fix the mess we are in, so the gamut of viewpoints is very healthy. There was always a magnanimous air of intellectual respect that has faded to a yawn here on The Maven, which hogs too much CPU in my opinion.
Ken Wilber has a great book called “Boomeritis” that predicted much of the world we live in today mostly by the Narcissism and Nihilism that is the culture of the consumer Boomer. I heard it was asked if a Millenial would prefer a McMansion without internet or a one room shack with it, and they overwhelming picked the latter. It was stated above that Boomer parents should force their Millenial children out of the house to work manual labor. This attitude undermines what is actually going on with the Boomerang, that is, that value is being kept close to home, repairing lonely family dynamics and isolated humans who are socialized to be individual purchasing units. There is much work to be done, yet much of it is cultural.
Forgot about grafanola! I remember him being mid to late 80s and that was years ago. Seemed a thoughtful guy with some unique insights related to his age. Hope he’s still around.
Used to be some interesting types on the old blog. I found Confed H to be insufferable, although he had a sad story. His son, then 20, had died overnight in a barracks fire during Swiss military service. Confed then devoted himself to fighting with people online, probably not the best way to deal with grief. Also didn’t endear him to the group and there was a lot of grousing about him, particularly from Black Swan and Fedwatcher.
Dunno what happened to Swan but I found him to be the most insightful poster, possibly my favorite on any blog. Hope he’s still enjoying the North Carolina beaches.
It isn’t really like your bedroom at midnight – it is more like Hyde Park Corner (aka Speaker’s Corner) – yes you own the pedestal and get to set the agenda, but by broadcasting in a public place you give up complete control of who turns up and what they say. If there is a counterargument you don’t like, even if somebody shouts it, it would be somewhat petty to take your pedestal and go home with only the people you like. Like all freedoms, they come with responsibilities (something the second amendment extremists need to learn before we have yet another school massacre), so you should expect responsible conduct and be able to stop destructive behavior, but not expect to sleep soundly listening only to quiet murmurs.
What happened with them? Did they get old and quit the Internet?
This is not a free speech issue as I have pointed out before. But I agree with the comment, stand alone. It simply does not apply here, as I have explained. In context, it implies I can scream in your bedroom at midnight.
“Necessity is blind until it becomes conscious. Freedom is the consciousness of necessity. ” – Friedrich Hayek
“The remedy for free speech is more free speech.” — Justice Louis Brandeis
Oh – as to censorship – whatever rocks your boat. If somebody is chasing people away or hogging every conversation then that is a behavioral decision rather than a difference of opinion
.
OK, the paper is interesting and I only had time at my break to skim it. It seems that there are a few headwinds for younger families – debt and home ownership are identified as the “likely culprits”.
Here is another thought from my experience. When the recession hit in 2008 it moved a lot of people’s retirement targets back – particularly older people who had most in the market. Many of the people I worked with concluded that the markets were fixed and pulled out of stocks, thus missing the snap back (and likely overshoot) we have seen since. This means that a lot of the people I work with are staying in their senior jobs years longer than they intended, creating a block stopping younger people from moving into “dead men’s shoes”.
Some of my friends (I work in high tech, the average 50-60 year old is in the $125-175K region) have no feasible plan to retire at their current level of wealth, and are wondering how long they can stay employed. More are wary of retiring a few years early and have an overdue recession wipe them out when they have no chance of getting back into the workforce at the same salary level they will have left.
When this cohort of workers finally retires and opens up the senior positions to the next generation, perhaps the younger generation will catch up – but it is not going to be easy and they are likely to work more years until the pendulum swings back.
Difficult job being the thought police. I don’t mind stupid comments being deleted as they waste time, but please keep comments that disagree with you as long as they are respectful in tone. They add to the narrative.
One of the problems with millennials is that many do not want to do manual labor or learn a skilled trade. A much higher percentage of these are still living at home supported by parents who don’t want to hurt their feelings by making them get a self sustaining job. There is still plenty of opportunity left for this generation to build wealth.
One problem with milennials
Leave alone some are amusing.
Boomers will remain by far the most important generation until their deaths. No other generation in the foreseeable future will wield anywhere near the power they’ve had since the late 1960s. To a limited extent youth will always be catered to, but they can only spend on credit.
Once Boomers are gone, the whole generational concept may die out. It’ll be the top few percent with vastly disproportional wealth vs everyone else, regardless of age.
@Mish, I remember the old days when I used to look forward to the posts of people like Black Swan and TinHat on your blog. Some idiot supertroll chased them and a bunch of others away (anyone remember Confederate Helvetica?). In light of that, either delete or mock as needed.
Dealer’s choice.
Thank you Mish for the great article. Delete the idiotic comments that are not contributing anything to the conversation.
Question to the thread: Should I start deleting idiotic comments, make fun of them, or simply leave them alone for everyone to privately laugh?