genflash53

We've been looking at things generational cohorts have in common. But let's not lose sight of the things that may result in dissension among them in the not-so-distant future. Most of these issues will be about money in general, and the long-term sustainability of Social Security retirement benefits in particular.

Matures are enjoying longer, healthier, more vigorous lives, and can expect to live 20 or more years after they retire. They're already looking for ways to simultaneously make their retirement income last while continuing to grow their nest eggs. Many will delay retirement as long as possible, hanging on until age 65 or 70, instead of clocking out at 59 1/2 or 62. This will give their personal savings and investments more time to grow, and make them eligible for heftier Social Security retirement checks. Returning to the job market to do consulting work, or taking on part-time employment, are other options.
Social Security is an understandably huge, scary issue for many Matures. Count on them to fight for the status quo unless someone has a reform plan that positively includes them out! With the clout of the AARP and other manifestations of the senior lobby behind them, they can make it stick.

Boomers, too, are going to be working well-past traditional retirement age, and will be competing with Gen-Xers for jobs. Moreover, once they've put their kids through college, don't look for Boomers to cut too many corners to provide financial legacies for their offspring. Empty-nester Boomers are going to need all the cash they can get to sustain their lifestyles for a long, long time. They may even expect financial support from their Xer children, who will be hard-put to oblige.
Most Boomers, having finally gotten the message, are turning up the volume on their personal retirement planning, which is good news for you. Many don't even want to factor Social Security benefits into retirement income projections, figuring they'll take whatever benefits are coming to them, but won't bet the farm on it. The result, however, is that when added to all the Matures depending on these benefits, the sheer number of Boomers tapping the current system is expected to deplete the Social Security retirement trust fund by 2029.

Gen-Xers, who are funding the current system with their FICA taxes, realize all too well that the Social Security safety net will be but a fond memory by the time they need it. They are also well aware that they're largely on their own when it comes to bringing about long-term reform of the system.

Generation Y is generally more comfortable using the Internet as a research tool to aid in making saving and investment decisions, rather than as a means for online banking or trading. "To effectively reach the youngest generation of Americans, whose lives are being shaped by digital media, marketers must deliver smarter, more sophisticated messages and build brands with them rather than for them," a study by advertising firm, Saatchi & Saatchi suggests.

Many young adults are pushing for a privatized or partially privatized Social Security program, which would maximize their two greatest wealth accumulation assets — time and compounding returns. A US News article offered the kind of example that resonates with both Generations X and Y. The story was of the secretary who never earned more than $15,000, but who died at age 86, leaving a whopping $86 million bequest to a Chicago children's hospital. Her secret was putting aside a few dollars each month and investing it in the stocks her boss was buying. Over the years, the miracle of compounding returns (plus some pretty good investment choices) made her rich.

Prediction: Washington must find the will either to: a) call time-out and switch over to a privatized Social Security system for everyone over a certain age; b) permit wage earners to invest x-percentage of their payroll tax into personal accounts; or c) come up with some other fiscally feasible, politically palatable version of Social Security reform. Failing that, the discontent of Generation X and the Cyber Boomers will become a political time bomb.