Sponsored by Resource Real Estate
By Felicity Duncan
Today, you work with clients who span four unique generations. Understanding these generations and their needs can help you build better relationships with your clients.
- Born 1981 to 2004
- Ages: 12-35
- 100 million
- Tech savvy
Millennials’ primary financial goals include managing student loan debt and saving.
The Wall Street Journal reports that average student loan debt for a 2016 graduate is $37,000. Millennials pay, on average, $312 a month on their student loans. This debt burden can make saving challenging.
A Tough Job Market
According to the Economic Policy Institute, the average starting salary for a college graduate was $38,500 in 2016, unchanged from 2000. In 2016, unemployment among those aged 20–24 was 8.1% compared to 4.2% for everyone 25 or older. Low earnings in a first job can mean decades of lost income.
- Born 1965 to 1980
- Ages: 36-51
- 65 million
Gen-Xers’ primary financial goal is to build, or rebuild, wealth.
Pew reports that 65% of Gen-Xers experienced home equity losses between 2007–2009, losing a median of $42,848. Homeownership rates among Gen-Xers are 4-5 percentage points lower than rates for same-aged households 20 years ago. These losses may affect their attitudes toward saving.
Heavy Debt Load
Per Pew, 56% of Gen-Xers have mortgage debt–the highest proportion among the generations–and they owe a median balance of $129,000. In 2014, a 44-year-old Gen-Xer carried debt of $142,077, 60% higher than the debt carried by 44-year-old Baby Boomers in 2000. A heavy debt load makes saving difficult.
- Born 1946 to 1964
- Ages: 52-70
- 74 million
Baby Boomers’ primary financial goal is to prepare for retirement.
Between 2007–2010, older Boomers saw their net worth fall by a median of $82,000. According to Census data, after the recession, Boomers had a median net worth of less than $200,000. This is insufficient for a comfortable retirement.
Inadequate Retirement Savings
The Insured Retirement Institute notes that four in ten Boomers have no retirement savings. Of those who have savings, 59% have saved less than $250,000. Over 40% of Boomers expect their standards of living to decrease after retirement.
- Born 1926 to 1945
- Ages: 70+
- 30 million
Traditionalists’ primary financial goal is to make their retirement savings last.
Overspending in retirement
Although they saved consistently, Traditionalists have failed to plan their spending. MetLife reports that only 25% of retired Traditionalists reduced spending after retiring, while 20% increased it. Less than 70% of their spending goes to necessities.
Rising Healthcare Costs
A key factor driving Traditionalists’ spending habits is higher-than-expected healthcare costs. Half of retired Traditionalists experience rising healthcare costs, and per the Kaiser Family Foundation, healthcare spending tends to increase significantly after age 80.
Understanding your clients and the realities that drive their financial decisions can help you work with them more effectively to achieve their long-term investment objectives.
Felicity Duncan is a practice management leader at Resource, a leading real estate and credit investment management company.
Learn more at www.resourcerei.com.