Summary
Gen Z and millennials need between $3 million and $5 million in retirement savings due to inflation.
Facts
- Gen Z and millennials need $3 million to $5 million for a comfortable retirement due to inflation.
- More than 7 in 10 investors believe that $3 million to $5 million is the ideal retirement savings target.
- The rise in inflation has led to a three- to five-fold increase in the recommended retirement savings target.
- Managing towards an unknown future, including uncertain prices and lifespan, adds to retirement anxiety.
- Bloomberg customers, who have high incomes and careers in finance, were surveyed for the study.
- The US government debt will increase by $5.2 billion per day, adding to the need for increased savings for retirement.
### Summary
Buying a home has become increasingly difficult for Millennials in Australia due to rising property prices and the need for larger deposits, leading to many feeling locked out of the housing market.
### Facts
- In 1984, the average income was $19,188 and the average cost of a property in Australia was $64,039.
- Today, the average income is $90,896 and the average home costs $920,100.
- Buyers now have to borrow 10 times their income, compared to 3.3 times in 1984.
- Many first homebuyers are finding it hard to afford the 20% deposit required.
- Millennials face a challenge of wealth rather than income, as they struggle to access the wealth needed for the deposit.
- University of Sydney economist Gareth Bryant says more Millennials are becoming lifelong renters.
- Parental support plays a significant role in helping Millennials enter the property market.
- Some Millennials, like Josh Franzin, have managed to buy a home through saving, hard work, and sacrificing short-term happiness.
Canadian millennials, especially homeowners, are expected to face significant economic damage and high interest costs in the coming months due to rising interest rates, according to a report by RBC, leaving them vulnerable to job losses and straining their high levels of debt.
The end of student loan payment forbearance could negatively impact the housing market, causing a decrease in household formations and homeownership rates as borrowers struggle to allocate their income towards student debt.
Canadian Millennials are struggling financially compared to previous generations, with higher levels of debt, stagnant incomes, and less disposable income, which could amplify the impact of an economic downturn, while Boomers are faring much better.
A survey conducted by Redfin found that 38% of home buyers under the age of 30 used family money, such as cash gifts or inheritances, to afford their down payment, highlighting the impact of family wealth on the housing market. The rising costs of housing have made it difficult for many individuals to enter the housing market without financial assistance from their families. This trend further perpetuates wealth inequality and solidifies the divide between those who have access to family wealth and those who do not.
The US experienced a significant decline in wealth last year, but millennials saw their net worth rise due to their higher investment in real estate, debunking the myth that they are financially struggling.
The middle class faces distinct challenges that can hinder their journey towards wealth accumulation, including high-cost degrees with limited returns, overextending with unaffordable mortgages, relying on credit cards to bridge budget deficits, falling for get-rich-quick schemes, and succumbing to societal pressure to live extravagantly. By being discerning with education investments, avoiding new car loans, not overcommitting to mortgages, refraining from using credit cards to fill budget gaps, being wary of get-rich-quick schemes, and resisting societal pressure, individuals can better navigate these financial pitfalls and work towards financial stability and wealth.
The aging population, particularly the baby boomer generation, is fueling the demand for housing, creating a shortage and making it more difficult for younger generations, like millennials, to buy homes.
Gen Z is more optimistic about homeownership than millennials, with a lower percentage believing it will be impossible in their lifetime, and while both generations face barriers to homeownership such as high home costs and student loan debt, Gen Z is doing a better job of saving and has a slightly higher rate of homeownership compared to millennials and Gen X at their age.
Millennials and Gen Zers are turning to side hustles and creative strategies, such as wedding gift registries, to save for down payments on homes amidst rising mortgage rates and high home prices, according to a Redfin study. However, many in these generations still face challenges in envisioning homeownership due to the perception of expensive homes and the inability to save for a down payment.
Despite increased household wealth in the US, millions of households are struggling financially due to inflation, high interest rates, and rising living costs, which have led to record levels of debt and limited access to credit.
The resumption of student loan payments in October will add to the financial burden of Gen Z and millennial Americans looking to buy a home, further squeezing their ability to afford housing.
Millennials and Gen Zers are concerned about the financial impact of baby boomers, as they believe the older generations' choices have contributed to their current financial struggles, including high student debt and difficulty affording housing, while boomers hold a majority of the nation's wealth.
High home prices and interest rates have created challenges for young Americans, but the boomer generation has benefited from high home prices and bond yields, making them less affected by the economic cons.
As federal student loan payments are set to resume, surveys indicate that the majority of borrowers plan to cut back on spending and will have difficulty saving for retirement, potentially leading to a drop in consumer spending and impacting economic growth. Some borrowers are already struggling with increased stress and debt from additional financial obligations taken on during the payment pause, while higher-earning households also anticipate difficulties in making payments. While there are options available, such as income-based repayment plans or a one-year grace period, the overall financial strain is expected to have significant repercussions.
Young Americans face unprecedented financial challenges, with rising costs of housing, education, and childcare, as well as limited career advancement opportunities, causing many to believe that attaining the financial stability of previous generations is unattainable.
Despite a stagnant housing market due to high mortgage rates, homeowners who are downsizing are considered fortunate as home values have appreciated significantly over the pandemic and they have the opportunity to buy a smaller home without debt.
Lower income households and Black and Latino communities will face significant economic hardships due to the expiration of COVID-19 federal support programs, a potential government shutdown, the end of federal funding for childcare, and the resumption of student loan debt repayments.
Millennials are being heavily impacted by higher interest rates, while baby boomers are benefitting from the increased rates by earning 5% on their savings, resulting in a significant wealth disparity between the two generations.
Older millennials, specifically those aged 35 to 44, are the least likely to feel financially secure, with 80% reporting high levels of financial stress due to factors like inflation, challenging economic circumstances, student debt, childcare bills, and soaring housing prices.
Millennials are being hit harder by elevated mortgage rates than other generations, as they were not able to take advantage of historically low borrowing rates during the pandemic, leading to increased mortgage debt and difficulty in entering the housing market.
American families are facing a variety of financial challenges, including inflation, high costs of living, and increasing mortgage rates, which are making it difficult for young families to buy homes; in addition, sudden job loss can lead to a financial doom spiral.
The depletion of pandemic savings and government aid in the US is leading to financial strain for low- and moderate-income households, potentially putting the nation at risk of recession by early 2024. Americans are cutting back on spending and using loans to make ends meet as stimulus checks and other forms of assistance run out.
Many millennials are nostalgic for the financial freedom they had while working minimum wage jobs in the early 2010s, and a 32-year-old photographer explains that his current financial stress is due to increased credit card and student loan debt, despite making more money and living in a double-income household.
Millennials may need to let go of their resentment towards baby boomers in the housing market, as current conditions resemble the 1980s more than the mid-2000s, with factors such as high inflation, rising interest rates, and a surge of millennial buyers contributing to a potential housing recession.
The current housing market is resembling that of the 1980s, with high inflation, rising interest rates, and a boom of homebuyers coming of age, potentially leading to a similar "housing recession" where home sales stay low and prices stagnate; however, demographic changes, such as millennials reaching prime homebuying age, could support home prices despite rising mortgage rates.
The graying Baby Boomer generation is now buying more homes than Millennials due to their accumulated wealth and ability to pay cash, leading to a shift in the housing market.
Baby boomers have benefited the most from a massive wealth transfer, particularly in the housing market, while millennials are being crushed by high mortgage rates and limited supply.