17 Jan 2020
A recent study in Australia shows that younger generations (millennials in their 30’s) are in danger of becoming poorer than their parents. (This is already happening in the US and UK and could become a global trend).
The older generations are getting more benefits from their government pensions and paying lower tax. This is all paid for by the younger generation via taxes.
“Today’s 40-year olds contribute twice as much to support retirees than the baby boomers did at age 40” – Grattan institute
Why is this happening?
• Financial crisis of 2007-2008 resulting in a slower economy, stagnant salaries, higher unemployment and less job security. Millennials don’t change jobs, which usually comes with a salary increase, as frequently.
• Greatest increase in jobs are the lower paying ones, which means salaries are lower.
• Cost of living has sky-rocketed - this puts financial strain on the budget.
• Millennials have the lowest home ownership rates and highest housing costs. – Only about half of Millennials aged around 30 own their own home compared to older generations, and spend an average of 25% on rent, the highest ever of all generations.
• Company pension benefits are less and less leaving employees with less retirement benefits. (resolutionfoundation.org)
With all these pitfalls, how can the younger generation of adults make up for it and get back on track?
• Firstly, set up an appointment with your deVere adviser to look over your finances and discuss the way forward. Any investment is better than no investment at all and there is still time to build up a decent nest egg.
• Even the smallest contribution towards a retirement or savings fund will accumulate with time. 30-40 year olds still have a decent 25-30 years to save up for their retirement. Compound interest will do the rest.
• Starting your own side-line business could supplement your income and alleviate financial stress or pay for your retirement.
• Many 30-something adults are looking at becoming expats and working in other countries to accumulate wealth.
• Consider moving jobs that pay more or have more growth opportunities. Think ahead for your career.
• Learn and upgrade your knowledge and skills regularly. Companies will see more value in you. (under30wealth.com)
• Stick to a strict budget and don’t make impulsive purchases.
• Save up for luxury purchases. Credit gives a false sense of security.
• Try to keep your big expenses as low as possible. Rent, food and travel/cars.
• Do not live beyond your means. Trying to keep up with the Joneses will only put you into debt.
Chat to your deVere adviser to help set up a plan of action to start building wealth. [email protected]
Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere adviser for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.