Are Gen Y-ers Really So Bad Off?
22 February, 2013 / by cmi
The Globe and Mail recently ran an article titled “Dear Gen Y: Your retirement is in trouble.” That may be true, but unfortunately The Globe chose to use it as an opportunity to not only tell Gen Y that their retirement was in trouble, but also to blame it (heavily) on the Baby Boomers. But is that such a fair assessment? And moreover, is it even true?
The fact that Gen Y’s retirement “is in trouble,” comes from the fact that CIBC just released a report showing that Gen Y-ers will see a decline of about 30 per cent in their retirement lifestyle from their working years. Or sorry, according to The Globe, their “best working years.” Delving deeper into the subject, the paper doesn’t just point out this startling revelation, but also turns around and points the finger straight at the Boomers for destroying this world and, as they would have you believe, taking all those bills and other currency into their graves with them.
But again, is this fair? Can the Boomers really be blamed for wrecking an entire generation’s retirement dreams? We don’t believe so. But before we make up our minds once and for all, let’s take a look at some of the arguments The Globe takes to task.
“People born during the Second World War are most likely to have the same standard of living in retirement than they did while they were working.”
Before we rip this argument apart, we wonder if it’s actually even true. How can people maintain their same style of living when they no longer have an income coming into the household – and oftentimes have lost two incomes? Yes, savings might be there to help support them, as they should be. But still Boomers will have to carefully budget and watch their pennies in order to make sure that they in fact, can maintain a good style of living – even if it’s not what they experienced in their working years.
Let’s also look at the working years of many Boomers compared to that of their children. Yes, Boomers entered the workforce at the exact perfect time to do so. Is that their fault? Can we actually say that they “ruined” the economy because of it? Even more so than that, because they were able to get great jobs and make a ton of money, they were able to pass that good fortune onto their children – the current Gen Y-ers that The Globe wants you to so desperately identify with. That’s not to say that Gen Y-ers will always be able to enjoy that good fortune. Because of that, Gen Y-ers have a much better lifestyle often than their Boomer parents did at the same age. And so to see a decline from being virtually spoiled to having to fend for yourself? Not an unreasonable expectation, and not one that is the Boomers’ fault.
“Gen Y, the older generation also took away your pensions. CIBC says that one-third of the Canadian workforce is now covered by a company pension plan, down from 37 per cent in 1992.”
So now the Boomers are being blamed for what all the big corporations are doing? Times are not terrible right now, but they are getting somewhat tough. Is it really so unexpected that everyone – including those employers – are trying to save money? The Globe has seemingly forgotten that employer pension plans are a privilege. And we can’t expect that privilege to always be there for us. Nor should we blame the Boomers if they aren’t.
“The older generation also bears responsibility for damaging the global financial system so badly five years ago that it’s still not working properly. That’s why we continue to have interest rates so low that returns on savings accounts remain firmly between zero and 2 per cent.”
Really? Clearly no one at The Globe was around during the 80s, when the Boomers had their own interest rate problems – just at the opposite end of the spectrum. During the recession of the 80s, the Bank of Canada’s interest rate was at 18% – and that was if you could find a good deal. While today’s piddly interest rates might be hampering the savings efforts of the Gen Y-ers, it nearly killed the financial picture of many Boomers; and it left many, many of them out of the housing market. Which brings us to The Globe’s next point.
“There’s the idea that the way to build wealth is to buy a home rather than saving. It worked for the baby boom generation, which has seeded this idea into the financial system and popular culture.”
Really? So now the Boomers are being blamed for the way other people think? No, a big home doesn’t equal a huge amount of savings – the paper’s right about that. But so many Boomers, just like so many of their children, had trouble getting a home because of that high interest rate. The problems stem from different reasons – such as mortgage rule tightening vs. high interest rates – but it’s still the same problem that both generations faced at some point. And the older group shouldn’t be held solely responsible.
Yes, the Baby Boomers did their part to make the economy what it is today – just like all generations do. But they also brought us many things that we may not have without them. Boomers contribute more to scientific advancements than any generation before (and so far, after) them. It’s also all those Gen Y-ers, bopping away to their iTunes and tapping away on their laptops, that should be giving a huge “Thank you!” to the Boomers. After all, Bill Gates brought us personal computers, and he was a Boomers. Steve Jobs it can be said, was solely responsible for digital music and iTunes. And guess what? He was a Boomer too.
Not to mention all the good Boomers do for those directly around them – their family. When we looked at whether Baby Boomers are really as privileged as people think, it was found that they actually try to help people more than they try to hurt them. 93% of Boomers are still helping their adult children out financially in some way, while 71% of Boomers are helping their kids pay for college. 55% of Boomers still have those adult kids living at home, while 53% of them have helped their kids buy a car.
Truthfully, we don’t know if Gen Y-ers are going to be worse off than their parents. No one does. That’s a waiting game who’s time will come, for sure. But even if that ends up being the case, and Gen Y-ers don’t enjoy the same “luxuries” as their parents did, can the Boomers really be faulted for it? Or is that just the way the ball rolled?