Will This Generation Be Poorer Than Their Parents?
The goal of every parent is to give their kids more than they had. But no amount of parental generosity can erase the fact that Gen Y is falling behind previous generations in terms of building wealth.
A recent article in the New York Times outlines the problem pretty succinctly. New graduates, who have degrees and debt, but fewer opportunities to get jobs that will allow them to amass savings and investments, are not only poorer right now — they’re likely to be poorer years from now, as well.
“Because wealth compounds over long periods of time — a dollar saved 10 years ago is worth much more than a dollar saved today — young adults probably face less secure futures for decades down the road, and even shakier retirements,” writes Annie Lowry.
A study by the Urban Institute suggested that the solution might lie in changing policies — making retirement accounts opt-out instead of opt-in, to encourage participation, or modifying the home mortgage interest deduction to allow low-income people to enter the market.
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(Photo Credit: 401(k) 2013/Flickr)