The first generation to be worse off than their parents?
When I was in my early twenties (a long time ago!), I heard a news report predicting that Generation X would be the first generation to have a worse standard of living over the long term than their parents. Early X-ers are now firmly ensconsced in middle age and the rest of us are arriving there sooner than we think. How's that prediction working out?
I find it really hard to compare myself to my parents because our lives are so different. Still child-free at my age, they were just getting ready to pack up from rural Canada and settle in the Pacific Northwest. In contrast, I live in New York City. They've been married for more than fifty years; I'm divorced. If you normalize salaries and standard of living some forty-odd years ago, I probably come out ahead on the overall financial scale. Part of that is because I have tax-advantaged investment options that weren't available to my parents when they were my age, like 401(k) and IRA plans. In other ways, however, you could also argue that my standard of living is behind in some ways. Case in point: I'm pretty sure my parents had television in the early sixties. I don't have room for cable in my budget and there's no way I can get reception without it, so I simply don't have it. I watch a little internet TV from time to time, but it's not exactly the same.
In other areas, I'd say that I'm way behind because of the way the work world has changed. My dad worked for a single employer in Canada and a single employer in the US; although he went through reorganizations, I don't think he ever worried about layoffs or downsizing the way I do. He also has traditional pensions both from his years of work in Canada and from working in the US. Between that and Social Security, my parents have never had to touch their retirement savings. I have a traditional pension too, but it's nowhere near as generous as my dad's. On top of that, I'm not confident that the pension plan will last for the rest of my working career, and I'm dead sure that Social Security won't. I think I have higher overall salary potential in my career, though, so that helps close the gap there. I became a homeowner earlier than my parents did, but I own a one-bedroom apartment that faces a concrete wall as opposed to a three-bedroom house with a huge backyard. I might have a slight edge in that area just because I accomplished it when I was younger, but you could arge that point a multitude of ways.
Overall, at this point in my life, I think it's a wash: I don't think I'm doing better than my parents were when they were my age, but I'm doing just about as well. They key point that this thought exercise brought out for me is this: The rules of the game have changed big-time. In the modern economy, the cards are stacked in such a way that if I'm ever going to be better off than my parents, I can't rely on employers or government to lend a helping hand as a reward for loyalty or years of service. It's definitely possible to end up being better off than my parents ever were, but I have to make it happen on my own.
Are you better off or worse off than your parents were at your age? Do you think Generation X is going to be better off than their parents were? How about Generation Y?
9 retorts. What say you?
Well, my dad had incredible job security for a long time. On the other hand, it was hard for him to transition into this era. He was laid off in his early 50s and had to find a good software job. Fortunately, he had lots of experience and found people who wanted it. Now he's about 4 years away from retiring (whew!).
I think I'm better prepared because I'm not used to the idea of job security. I also think the flexibility works for me.
But better off? I think it's about equal. Of course, my parents were single until their late 30s and I'm married.
I was writing a comment on your blog about this but it got too long so it's now a post over on my blog...
*My Post*
i'm better off until my mom retires next year and starts getting her pension. something i don't have and won't have. but my family is pretty working class, so up until recently i was making more money than them...
It is difficult to compare my situation with my parents. By my age, they were married with five children. My father is a farmer and until ten years ago, my mother stayed at home. I am single, have two graduate degrees and live in an area with a higher cost of living than my parent's rural farm. Since my parent's net worth is well over $1 million at age 57, I believe they have me beat. I am in my mid 30s and have a net worth of ~$80,000. However, I do not know if this increasingly rare farming career adds more or less fuel to the fire of generational differences.
I'm probably better off at this point, but it's most likely due to the fact that I'm more proactive when it comes to my finances. The rules of the game have changed so much though, so it's really a tough comparison to make.
Worse off because there's no way we'll ever match our parents pensions. No way. They also have employer provided medical coverage.
Mrs. Micah - I was so glad my dad retired when he did, too. Computers were just coming into offices at that point, and he would never have been able to make the transition.
sfgal - thank you so much for your wonderful post. I'm really glad you enjoyed what I wrote.
piggybankblues - it's hard to tell, but it sounds like you are ahead of where your folks were when they were your age. Good job on bucking what seems to be a trend.
frugal pursuit - thanks for stopping by. Your parents are probably in the lead now, but you might be in a much better financial position relative to where they are now when you retire. I agree, though, it's hard to compare - my life is so different from my parents' lives.
limeade - Sounds like you and I have a few similarities with regards to what we do versus what our parents did at our age. I'm more proactive than my parents were when it comes to playing good offense (making a good salary and investing), but I don't think I'll ever measure up to my mom's defense (saving and frugality). I try, though.
living almost large - good point; my dad's medical (and by extension, our family's medical) was covered by insurance, and I pay for my own. Big, big difference.
I'm in better financial shape than my parents were at my age. I certainly have more in savings, even inflation adjusted, than my mom did as a college student. When my father was a high school student, his earnings were essential to the support of his family. His stories include lines like, "I remember when we rose above the poverty line. I was working full time, Mother was working full time, and my older sister was working part time. My brother and I got up at four every morning to help our father deliver newspapers as well."
I've grown up with a constant reminder that even when it seemed like we didn't have much, we were leading an extremely cushy lifestyle by comparison. This gives me perspective, but it also results in some guilt and worry over being spoiled and weak.
e.c. - Thanks for chiming in. My parents grew up in the Depression and I heard similar sentiments growing up. I also worry about being spoiled and weak (and overcompensate for it).
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