Different generations responded differently to the recession. A new report from Financial Finesse brings to light just how distinctly the characteristics of each generation impact financial behaviors and habits.
According to the report, Millennials are managing their finances surprisingly well, despite having by far the lowest income levels, while Gen Xers are having a harder time with debt, making ends meet, and most aspects of overall financial planning.
Early and late baby boomers with minor children appear to be over-prioritizing college planning at the cost of their own financial security and leaving themselves very vulnerable to major catastrophic events as a result of not taking care of their own needs.
"When you look at the groups as a whole, you recognize that they are really dealing with issues stemming from perspectives and habits rooted in their generations,” Liz Davidson, CEO and founder of Financial Finesse said in a release. “Millennials entered the workforce during a time when it was 'cool' to be thrifty, Gen Xers lived in the shadow of the Boomers and have a generally cynical attitude toward achieving their goals, and Boomers, both late and early, are part of a generation that had everything tailored to their needs. This really creates a different set of issues as a result for each group."
Analysts say the distinct differences among generations are why it is crucial for financial professionals to reform their traditional approach to financial planning and adopt a new approach that targets younger generations’ concerns.
Retirement planning remains the one issue all generations are most vulnerable in, even for late baby boomers that are on the cusp of normal retirement age. Within this group, 50% have not run a retirement projection, and only 25% know they are on target to retire comfortably.
While this is concerning, even lower numbers for younger generations could pose a greater threat considering that younger employees are less likely to receive full Social Security benefits and more likely to face higher taxes and inflation when they retire.
There has been great emphasis on the significant challenges facing Boomers when it comes to retirement — namely that more and more employees in this generation are being forced to delay retirement, or worse, are having to retire for health reasons with insufficient savings, but not enough emphasis has been placed on younger generations who are already struggling more than Boomers did at their age due to the recession.[Source: Research conducted by Financial Finesse. 6 Dec. 2012. Web. 12 Dec. 2012.]