I’m late Gen X, and as an international business advisor my work involves an element of forecasting especially around personal and market finances. I don’t pretend to be perfect. Consider this a first draft on a core belief that impacts my business and worldview.
My firm belief is that Millennials will be the richest generation in history, outpacing even the Baby Boomers. This won’t mean every Millennial of course – generations are generalisations, and there are plenty of Boomers retiring into poverty. But the average 20-35 year old today will retire with more money in real (inflation adjusted) terms as well as a higher quality of life than any generation that has preceded them.
Most Millennial-Boomer comparisons fail to align the ages of the generations, comparing people early in their career today with the older Boomers of the 1980s – 2020s. Remember, it was the Boomers who were the original money-free flower children, inspired to “turn on, tune in, and drop out” because they would never have it as good as their parents. It was only later, when they became the largest generation in the workforce and at the ballot box, that they were able to transition into significant wealth creation and societal redevelopment that suited them.
The Millennials of the 2000s and 2010s align to the Boomers of the 1960s and 1970s. In the coming decade, they’ll assert their superior numbers just as the Boomers did in the 1980s when they created the “Greed is Good” mentality that now defines them as a cohort. The 2020 US Election, for example, will be the first where eligible Millennial voters will outnumber eligible Boomers, though it will take several more cycles in that country for registered voters to catch up.
The 2020 US Election will be the first where eligible Millennial voters will outnumber eligible Boomers
In the coming decade we will also see the largest wealth transfer since Europe in the 1300s, as retiring and dying Boomers begin to sell (or leave) assets to their children, with Millennials having most to gain from compounding wealth given the early Gen Xers are themselves nearing retirement age. The issues of wealth-bracket mobility will persevere, although technology advancements and progressive social changes mean Millennials are also better placed to find career, investment, and entrepreneurial opportunities though this transition that weren’t available to those born previously.
The single factor most blamed for impoverished Millennials is affordable housing. Some of this is the naive comparison, forgetting that many who own homes in San Francisco today were squatting in the Summer of Love. It assumes that the preferences for one generation are the same for all – Boomers could afford a house in their 20s, Millennials can afford world travel, and I know which is more important to me (my VHS + DVD collection – did I mention I’m Gen X?).
Most obviously though, housing fears overlook that the factors driving up prices in dense geographic cities like Sydney, Auckland, San Francisco and so on need not apply in ten years time, let alone over a 40-50 year retirement planning vista. Compelling factors like remote work technology – I’m already working with clients in 4 continents from my home office – and autonomous cars – turning the commute into productive time, making it easier to live further out and reducing the need for roads and carparks thus creating land for more mid-to-high density housing – must be accounted for when comparing a 30 year old on a median salary with a septuagenarian after decades of mortgage repayments.
The final piece for my prognosticating is a view of the wider economic cycles. The most popular article on my website predicts a terrible retirement for those born from 1978-1982 (ie, the cusp or pre-Millennials). This is because the 35-40 year economic cycle that gave us the Global Financial Crisis (and similar depressions in the 1890s, 1930s, and 1970s) not only impacted this age group as their career was advancing but will also arrive early in their projected retirement years creating a similar Sequence of Returns risk to those who retired at the peak of the dotcom boom.
Many Millennials by comparison weren’t even in the workforce at the time, or saw the lowest income years of their lives delayed a little – their careers will ride a long-term economic boom, just as the Boomers saw from 1982-1999, and while a significant recession in their late middle age will impact a lot of individuals, as a cohort they will retire into the good times that will follow, again just as many Boomers are doing today.
The similarities between Boomers and Millennials far outweigh the differences. They will become what they behold. This is not to say that the status quo will hand such wealth to Millennials. Indeed, their power at the ballot box will allow them to mould policy and society to suit them through a process previously unavailable to them (but well-known to Boomers). So declaring Millennials will be the richest generation in history does not suggest inequality need not be addressed, merely observing that those who will benefit from the changes will soon have the means to do so.
As a sandwich-generation Xer, I humbly welcome our new overlords.