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I'm 37. I probably won't be retiring for the better part of thirty years.
When I look at trends from my Silent generation grandparents-aged people to my mid-Boomer parents-aged people, a couple of patterns emerge.
1) In spite of usually superior inflation adjusted incomes and higher levels of education, the Silents and early Boomers had a much more comfortable retirement than younger Boomers will, even though those Boomers are wealthier on average.
2) I don't know if "career-focused" is the right word, but there was definitely an expectation of longer hours and giving more to the company for Boomers than it seemed for Silents, who often had a much less demanding corporate culture.
3) Boomers generally job-hopped a lot more. With pensions being far less prevalent in the private sector than when Silents were in their prime, there was far less incentive to stay with one employer for your whole career.
Here are a few places I think the Millennials and Generation Z will find different from today.
1) While SS will probably still be around, who knows if the benefits will be as generous as they are today. If anything, I'd say there will be more skepticism.
2) Speaking of SS, we may be on some form of UBI by then due to the impact of AI and technology on employment.
3) Employers in the private sector are often becoming "cheaper" on retirement matching and planning. I used to work for a large hospital system. Employer 403b contributions are not guaranteed - they are dependent on "system financial performance." Deposits are made in a lump sum annually, and you must be employed at the beginning of and the end of the fiscal year to be eligible for that match. Given that, it would be possible for someone to be employed for up to two years and get no match at all due to onboarding/offboarding timing.
I've seen lots of stories about percentage matches being cut, longer vesting periods, etc.
4) People seem to job hop incredibly frequently. I left that hospital system at the beginning of this year. Since then, 4/5 analysts have turned over. There have been two different managers since then, and four since 2021.
I used to work for a fintech company, and it's also like that - constant turnover.
With no continuity anywhere, it's hard to build savings, unless you're making a lot of money billing by the hour or something like that.
5) Pensions are all but gone outside of the public sector.
6) AI will likely eliminate many jobs. There are probably going to be more people on the sidelines.
7) The cost of living situation is making it difficult for younger people to pay for anything more than essentials. Daily costs many times are crowding out what would otherwise be going toward savings.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Future retirement will be what you make and plan for... YOURSELF, TODAY.
Don't count on anything, as your bucket list may get upset. (tomorrow).
Thus live for today, as you may never see tomorrow, and if you do, it may be very different than you imagined.
If you plan on traveling... travel (today)
If you plan to have a nice country farm on acreage, find it today (or within the next few yrs)
Volunteering? Do it today
I can think of far too many people, family, and friends who never made it to retirement. Even more who arrived to find a foreign concept and plan. (and definitely, conditions... economic, health, relationships, demands...). So much changed in my first 5 yrs of retirement (before age 50), I could have never imagined or planned for. But very glad I was FLEXIBLE and had accomplished many of my objectives while able, and on the j-o-b. (as in today, right now).
It, (spending / saving) all adds up. and cumulatively authors your path. (I hear so many spending $00+ on food and entertainment / month... fine if you can afford it, but plenty of people are happy and well fed on a fraction of that.) New / expensive cars and electronics? It all comes out of your 'retirement' pot.
Then there are the unknowns. (life vs death). Tough to plan for, but essential to acknowledge.
I think it will be pretty much as it is now, except that the middle class will be almost gone. In short, I think the very wealthy will be fine and be able to enjoy their retirement, and everyone else will struggle to survive until they finally die.
Sorry to be so pessimistic, but that is honestly what I think.
The younger generation needs to stop saying "I can't" and stop waiting for the government to pay their way through life. All of the social media whining is not helping.
Not saying that YOU are doing this, but there does seem to be a prevailing attitude of helplessness when the reality is it has never been easy to save when you are first starting out. In fact, the young Boomers and Gen X were pretty much the first generations to see pensions either go away or get severely watered down to the point that you had no choice but to put money away for yourself. I remember hearing in my 20's that Social Security may not be there for us so we had better save for ourselves. Here it is 2023 and it looks like SS is still here.
Those in their late 50's or 60's either saved when they were younger or they didn't. For those who didn't save, they will be working longer. So I recommend saving now - like you are already doing.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Retirement income for the average person has been reduced every generation. There used to be a lot more unions with pensions, and private employers providing at least some pension to supplement Social Security. Another part of it is the growing tendency to job hop, not staying with the same employer long enough to qualify for the pension or build enough 401k with matching. Public employees have always done better with less pay but much better benefits, and pensions. I worked with "silents" at a public agency that are now in their 80's or more, making more with their pension plus SS than when they worked. Their generous pension plan has since been downgraded twice, newer employees as of the 1980s will get much less when they retire, and those hired in the 1990s and since even less.
With the cost of other benefits getting so expensive (medical, dental, required family medical leave) something has to balance that, and pensions/401k matching are expensive. For someone in their 30s-40s today I would expect there to be much more need to take it into your on hands, putting as much as you possibly can into retirement accounts. That's hgard to do now with the current inflation.
About 80% of seniors aged 65+ in the US own their home, suggesting that a similar number of seniors have assets (ie, at least a home) to leave to the next generation. Therefore, I expect that Millenials and Gen Z will rely on inheritance much more than previous generations in the US. I think investing for retirement, and the annuity industry, will substantially expand.
But destitute Boomers tended to have a lot of kids, which would have expanded generational poverty among Millenials and Gen Z (where destitute Millenials continue to have a lot of kids). I think expansion of welfare class is more worrisome than alleged generational drop in the standard of living among Millenials and Gen Z.
The US cannot afford $4 Trillion a year for UBI. Millennials need to give up on retiring at 18 (especially since now they are 40). They were done no favors by being given health insurance to keep them in their gig jobs. We all had to get real jobs to have health insurance (which means we paid into SS). SS will be there UBI not so much.
My old boss maxed out his 401k for 35 years all going into the S&P 500. He's got millions now. He stayed in school and got his masters and started working a permanent career by 25 (so he had a head start as many people do). I'm not saying this is the year to switch into 100% equities and I am not saying the past will be repeated. I'm saying not everyone did That. That is nothing unique to the Millennials in all their specialness thinking.
About 80% of seniors aged 65+ in the US own their home, suggesting that a similar number of seniors have assets (ie, at least a home) to leave to the next generation. Therefore, I expect that Millenials and Gen Z will rely on inheritance much more than previous generations in the US. I think investing for retirement, and the annuity industry, will substantially expand.
But destitute Boomers tended to have a lot of kids, which would have expanded generational poverty among Millenials and Gen Z (where destitute Millenials continue to have a lot of kids). I think expansion of welfare class is more worrisome than alleged generational drop in the standard of living among Millenials and Gen Z.
The younger generation can not rely on getting an inheritance. The costs of eldercare are through the roof and that is even with exceptionally good planning.. The costs have gotten so outrageous that you either plan to get eldercare for yourself OR you leave an inheritance for your kids because you won't be doing both.
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