Set Aside Some Time to Read “Generation Screwed”
If you have time this afternoon (or maybe this evening), you’ll want to check out this longread from the Huffington Post’s Highline: “Generation Screwed: Why millennials are facing the scariest financial future of any generation since the Great Depression.”
Michael Hobbes explains why Millennials are in such dire financial straits, why it’s even worse for Millennials of color, and why our financial situation isn’t likely to improve in the future.
I’ll pull out three highlights; first, on income:
In sum, nearly every path to a stable income now demands tens of thousands of dollars before you get your first paycheck or have any idea whether you’ve chosen the right career path.
(Yes, he’s including the trades, many of which require “up to $20,000 in schooling and 2,100 hours of instruction and unpaid practice.”)
Second, on expenses:
We’re all living in a state of permanent volatility. Between 1970 and 2002, the probability that a working-age American would unexpectedly lose at least half her family income more than doubled. And the danger is particularly severe for young people.
Lastly, on retirement:
[…] the biggest problem we face is not financial illiteracy. It is compound interest.
In the coming decades, the returns on 401(k) plans are expected to fall by half. According to an analysis by the Employee Benefit Research Institute, a drop in stock market returns of just 2 percentage points means a 25-year-old would have to contribute more than double the amount to her retirement savings that a boomer did. Oh, and she’ll have to do it on lower wages.
Read the whole thing.
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