You have reached your limit of free articles this month.

Enjoy unlimited access to SpringfieldNewsSun.com

Starting at just 99¢ for 8 weeks.

GREAT REASONS TO SUBSCRIBE TODAY!

  • IN-DEPTH REPORTING
  • INTERACTIVE STORYTELLING
  • NEW TOPICS & COVERAGE
  • ePAPER
X

You have read of premium articles.

Get unlimited access to all of our breaking news, in-depth coverage and interactive features. Starting at just 99c for 8 weeks.

X

Welcome to SpringfieldNewsSun.com

Your source for Clark and Champaign counties’ hometown news. All readers have free access to a limited number of stories every month.

If you are a News-Sun subscriber, please take a moment to login for unlimited access.

Gen X and Gen Y falling behind parents’ wealth


For young people today, the American dream of working hard, saving money and becoming richer than their parents may be out of reach, according to a new study.

Americans in their mid-30s and younger have accumulated less wealth than their parents did at that age more than 25 years ago — a trend that threatens to weaken the economy overall, according to the study by the Urban Institute, which investigates and analyzes the country’s social and economic problems.

Stagnant wages, diminishing job opportunities and lost home values are behind the issue and have kept young Americans from saving even as the economy doubled from the early 1980s, the study found.

“Young people are falling behind,” said Caroline Ratcliffe, one of the authors of the “Lost Generations? Wealth Building among Young Americans” report.

“Across different generations and ages, what we tend to see in this country is that each generation is better off and wealthier. That fact that this group is falling behind is very different,” said Ratcliffe, a senior fellow at the Urban Institute.

If young Americans cannot accumulate wealth over their lifetimes, such as people in prior generations, they will be less able to support themselves when they retire, Ratcliffe said. And her study points out that despite the relative youth of those in Gen X and Gen Y — people born since 1966 — they may not be able to make up the ground they have lost.

‘In debt right away’

University of Dayton alumnus Rebecca Young said she has benefited from her parents’ strong savings, and she hopes to one day do the same for her future children.

At age 23, she is working toward a master’s degree and stocking what she can in a rainy day fund she has had since high school. But, the Xenia native said it can be difficult to save, especially for those young people who take out large student loans during college. Ohioans who borrow to pay for school graduate with an average $28,683 in debt, according to the Project on Student Loan Debt.

“People in my generation are of the opinion that it’s okay to take out tens of thousands of dollars in student loans,” said Young, who graduated from UD in May 2012. “That puts them in debt right away.”

And with that money in their checking accounts, they do not take into account that they are spending borrowed money, Young added.

Student loan debt has increased in recent years and recently passed $1 trillion (more than credit card debt). Ratcliffe said those large loan burdens can have a ripple effect, delaying young people from being able to build a savings or buy a house.

Americans in their 20s and 30s who were homeowners were among the hardest hit by the housing crash, because their mortgages were large compared to their home values and they could not take advantage of lower interest rates, Ratcliffe said.

The wealth of those ages 29 to 37 suffered the largest fall, dropping 21 percent compare to people of that age in 1983, according to the study.

Now, young people’s concerns about being worse off could have a long-lasting effect on their expectations, Ratcliffe said.

“The idea of moving into the suburbs and having a big home, maybe that changes for this generation,” she said.

‘Not thinking about the future’

Ratcliffe said if young people cannot catch up to previous generations, they will be more likely to rely on social safety net programs because they will be less able to support themselves during retirement. She said some of the government programs that support long-term asset building must be redistributed to help low-income and young households.

On their own, Radcliffe said young people should start saving by transferring even just $10 every month automatically into a separate account.

Wittenberg University sophomore Marston Garceau said his parents always encourage him to save, keep his receipts and create a budget for the money he earned working three jobs over the summer. But most students, he said, will spend instead and “go out to eat when they don’t need to or buy video games, like me.”

“We’re living in the here and now and not thinking about the future, where my parents are all about the future – which I am thankful they are or I wouldn’t be here,” he said.

Miami University freshman Ariel Baker, 21, said she has already learned some hard financial lessons since her first go-around in college as a teen.

Baker said she ran out of money when she first enrolled at Miami, had to move back in with her parents and worked odd jobs for years to save enough to re-enroll. Now, the zoology student said she is spending smarter with scholarships to help her pay for her schooling.

Baker said how much someone saves really depends on their individual habits, but she in general: “the economy hasn’t fully recovered yet, so I’d say now is not the time to be looking at how my generation saves money.”


Reader Comments ...


Next Up in News

Fox News faces new lawsuit alleging racial discrimination, harassment
Fox News faces new lawsuit alleging racial discrimination, harassment

Legal troubles at Fox News grew worse Tuesday with 13 plaintiffs, including reporter and anchor Kelly Wright, joining a lawsuit that alleges racial discrimination and harassment at the company. The plaintiffs are all former or current employees. Their suit accuses the network of “abhorrent, intolerable, unlawful and hostile racial discrimination...
7 things to know now: Man kills daughter on Facebook Live; ‘Bachelor’ Chris Soules arrested; sanctuary cities
7 things to know now: Man kills daughter on Facebook Live; ‘Bachelor’ Chris Soules arrested; sanctuary cities

Here's a roundup of news trending across the nation and world today. What to know now: 1. Man kills daughter on Facebook Live: A man in Thailand murdered his infant daughter, broadcasting the crime on Facebook Live Tuesday. Wuttisan Wongtalay, 20, hanged his 11-month-old daughter before killing himself. His death was not broadcast on the social media...
WATCH: Injured gator rescued from roadside median, gets a kiss
WATCH: Injured gator rescued from roadside median, gets a kiss

Another “snapping” Florida gator was spotted on the side of the road, but this one had a reason to be upset – it was injured, authorities said.  An 8-foot-alligator was found “resting on the median” in Tamarac on Sunday. The reptile was “badly hurt and visibly bleeding,” according to WPLG. ...
Florida man allegedly throws fire extinguisher at disabled veteran
Florida man allegedly throws fire extinguisher at disabled veteran

A Florida man is accused of throwing a fire extinguisher at a disabled veteran. James M. Hagen, of Gainesville, reportedly got into an argument with his neighbor, a disabled veteran in a wheelchair, on Monday. The argument allegedly stemmed from Hagan’s belongings blocking his neighbor’s access to a fire extinguisher, according to...
Highs in the mid-80s today, storms tomorrow
Highs in the mid-80s today, storms tomorrow

Quiet and cool morning on Wednesday. Sunshine returns through the day.  Wednesday will likely be the warmest day of the year so far  Showers and storms early Thursday  More storms through weekend TODAY: Highs will soar into the middle 80s which is more than 15 degrees above normal. The warmest we have been this year was 82 degrees...
More Stories