Generations and Personal Finance-10-17
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An overview of how people in different age groups handle money
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Generations and Personal Finance-10-17
- 1. PF SMS iconsPF SMS icons 1 https://learn.extension.org/events/3108 This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Readiness Policy, U.S. Department of Defense under Award Numbers 2014-48770-22587 and 2015-48770-24368. Financial Planning for Different Generations: Touchstones, Tasks, and Teaching Strategies Source: Clipart Panda
- 2. Webinar Objectives • Increase knowledge about characteristics of generations • Increase knowledge about generational personal finance practices • Increase knowledge about generational personal finance action steps • Increase knowledge about generational financial education resources 2
- 3. Part 2 Generational Personal Finance Barbara O’Neill, Ph.D., CFP® Rutgers Cooperative Extension boneill@njaes.rutgers.edu 3
- 4. Talkin’ ‘Bout My Generation 4 https://www.youtube.com/watch?v=sU5KBUGvM3U
- 5. The Influence of Early Environments “What imprints on younger people impacts them for the rest of their lives” Cam Marston, Generational Insights https://generationalinsights.com/about/ 5
- 7. Generational Touchstones 7 Source: National Endowment for Financial Education
- 8. Life Cycle Tasks That All Generations Pass Through 8 Source: Take Charge Today, formerly known as Family Economics and Financial Education (FEFE)
- 9. The Financial Life Cycle 9 Source: Take Charge Today, formerly known as Family Economics and Financial Education (FEFE)
- 10. Generations Defined 10 Source: Dr. Ethel G. Jones, Louisiana Tech University, School of Human Ecology Source: Wall Street Journal: https://www.wsj.com/articles/analysis-of- the-generations-isnt-an-exact-science- 1468575000
- 11. Generational Differences Activity 11 Source: Dr. Ethel G. Jones, Louisiana Tech University, School of Human Ecology
- 12. Question #1: How Much do You Know About Generations and Personal Finance? 12
- 14. Spending Behavior Source: Dr. Ethel G. Jones, Louisiana Tech University, School of Human Ecology Source: Bank of America/Merrill Lynch Take-aways: Millennials spend the most on eating out, Gen X spends the most on housing, Baby Boomers spend the most on furniture/building, and Traditionalists spend the most on groceries.
- 15. Millennial Spending vs. Others 15 Source: Bankrate Spending Index, July 2017: http://www.prnewswire.c om/news- releases/millennial- spending-habits-differ- from-older-generations- 300491437.html
- 16. Payment Behavior Source: Next Gen Personal Finance: https://docs.google .com/presentation/ d/1e6qcFBx6K- UNpXmzllpGalXKg U4t4XoNspucTFe UJ24/edit#slide=id. g18210699ce_1_6
- 17. Comfortably Cashless Source: Next Gen Personal Finance: https://docs.google.com/prese ntation/d/1- 2R_jszVMwlVW2mUvrnPM- EFo6GqhIpRIK9z1LfuinE/edit #slide=id.g1821408edd_0_0
- 18. Credit Cards By Age Source: Next Gen Personal Finance: https://docs.google.co m/document/d/170zn pcLfVahk3H7O4Gqb S1u124ABMvuxsvc4 DD3X0kM/edit
- 19. Credit Card Debt by Age Source: Next Gen Personal Finance: https://docs.google.com/document/d/1LcYwZIXZf1AC0i7v3I6sJEumCt9xZBsAXu8OS AYbx7Y/edit
- 20. Credit Scores By Age Source: Credit Karma: https://www.creditkarma.com/trends/age
- 21. Auto Insurance Premiums By Age Source: Value Penguin via Next Gen Personal Finance: https://docs.google.com/document/d/1sgTUFbCvNyUbEyAiIiUNsXIAxX9PD 4OSoACjt0xzczE/edit
- 22. Health Insurance Premiums By Age Source: Value Penguin via Next Gen Personal Finance: https://docs.google.com/document/d/13kyHDBg91oCZUzmWip7PRCi9CUm FDmg89d1kXHBkuLM/edit
- 23. Health Care Barriers by Generation
- 24. Income Tax Filing By Generation Source: GO Banking Rates: https://www.gobankingrates.com/personal- finance/43-percent-americans-file-taxes-comfort-home-survey-finds/
- 25. Question #2: Comments So Far?
- 26. Saving and Investing Behavior Source: T. Rowe Price Report, Issue 135, Spring 2017, p. 14-15; https://individual.t roweprice.com/st aticFiles/Retail/S hared/PDFs/price report_spring.pdf ?van=pricereport- spring
- 27. Cash Asset Allocation Source: Blackrock survey via Investopedia: http://www.investope dia.com/news/millen nials-are-risk-averse- and-hoarding- cash/?lgl=rira- baseline-vertical
- 28. Savings Goals Source: Merrill Edge Report, spring 2017: https://olui2.fs. ml.com/Publish/ Content/applica tion/pdf/GWMO L/Merrill_Edge_ Report_Spring_ 2017.pdf
- 29. Generational Saving Perceptions Source: Merrill Edge Report, spring 2017: https://olui2.fs.ml.com /Publish/Content/appli cation/pdf/GWMOL/M errill_Edge_Report_S pring_2017.pdf
- 30. Workplace Retirement Savings Plan Access
- 31. Multi-Generational Housing Arrangements Source: Next Gen Personal Finance: https://docs.googl e.com/presentatio n/d/1RgiqeOwXdA 6_HsyjhTyKhq1S5 1tB3GOj0kInQsItL h4/edit#slide=id.g 99918596f_0_129
- 32. Young Adults Living With Parents Source: Pew Research Center: http://www.pewsocialtr ends.org/2016/05/24/f or-first-time-in- modern-era-living- with-parents-edges- out-other-living- arrangements-for-18- to-34-year-olds/
- 35. Generational Overview Source: Hagen Jokela, Hendrickson, & Haynes (2013). Teaching Financial Literacy Across the Generations. Journal of Extension, 51(1); https://www.joe.org/joe/2013february/tt6.php
- 36. General Financial Action Steps 36 Source: David Lerner Associates’ Guide to Smart Retirement Strategies, David Lerner Associates, Inc., Syosset, NY
- 37. Blog Post About Generations 37 Source: https://moneytalk1.blogspot.com/2017/07/ personal-finance-tasks-by-decade.html
- 38. Millennials (Gen Y): Age 17-35 in 2017 (b. 1982-2000) • Train for a career and establish a household • Learn to budget and “pay yourself first” • Organize a repayment plan for student loans • Build an adequate emergency fund • Fund a Roth IRA account for retirement savings • Start 529 plans or other savings plans for children • Build a positive credit history • Minimize taxes (e.g., tax credits)
- 39. Millennials (Gen Y) • Explore financial institutions (bank, credit union, etc.) • Increase investing expertise • Invest for the long-term in stocks/stock mutual funds • Buy life insurance to protect dependents and/or private student loan co-signers • Teach children about personal finance • Balance YOLO/FOMO mindsets with financial security • Avoid “hoarding cash” to avoid investing • Develop a personal financial identity
- 40. Generation X: Age 36-52 in 2017 (b. 1965-1981) • Don’t forget about old retirement savings plans • STILL invest for the long-term in stocks/stock funds • Diversify investments and rebalance portfolio • Enhance employment skills (build human capital) • Try to “max out” retirement savings plan deposits • Talk to aging parents about their finances • Consider hiring a financial adviser
- 41. Generation X • At age 50, save more for retirement with catch-up provisions for IRAs and employer savings plans • Manage increased need for credit and insurance • Understand that retirement savings generally trumps college savings • Don’t neglect health in pursuit of wealth • Prepare a will if one wasn’t already created
- 42. Baby Boomers Age 53-71 in 2017 (b. 1946-1964) • Decide when to take Social Security benefits • Determine a retirement income strategy (e.g., 4% Rule) • Learn about Social Security, Medicare, and pension • Investigate later life housing and living costs • Learn about required minimum distributions (RMDs) • Try to pay off all debt (including a home mortgage) before retirement • Start taking advantage of “senior discounts”
- 43. Baby Boomers • Consider long-term care insurance or earmark a portion of savings to “self-insure” • Invest in college savings plans for grandchildren • Consolidate accounts for simplification • Consider taking classes and/or building networks for a “second act” (e.g., freelance work) • Review estate plan and adjust as needed • Care for aging parents or other dependents • Make the most of remaining paychecks to save for retirement
- 44. Mature/Silent/Traditionalists Age 72-90 in 2017 (b. 1927-1945) • Get more strategic about philanthropy (e.g., large gifts, charitable trusts, donor advised funds, etc.) • Talk to children/heirs about finances and estate plan • Streamline/consolidate financial accounts • Gift heirlooms while alive to see recipient enjoy them • Downsize and/or donate “stuff” • Hire help as needed (e.g., yard work, cleaning)
- 45. Mature/Silent/Traditionalists • Make it easy to manage money and pay bills (e.g., direct deposits and automatic withdrawals) • Make sure family members know where to find personal and financial documents • Adjust lifestyle to a declining real income, if needed • Take RMDs from retirement savings plans • Regularly review beneficiary designation on life insurance and retirement savings plans
- 46. Don’t Forget Generation Z! Video: https://www.youtube.com/watch ?v=K1HyDn7dZ1o Born 1994-2010 (approx.); next cohort of future employees Video: https://www.youtube.com/watc h?v=I7N1JJo6eFg
- 47. Gen Z Take-Aways • Make up 25 percent of U.S. population • 62% anticipate challenges: work with Boomers/Gen X • Realistic thanks to skeptical Gen X parents, recession • Competitive with “do it yourself” mentality • 74% prefer to communicate face-to-face • 75% say there are other ways to get a good education than going to college https://www.inc.com/ryan-jenkins/generation-z-vs- millennials-the-8-differences-you-.html
- 48. The Military Lifecycle 48 Source: Consumer Financial Protection Bureau (CFPB) Office of Servicemember Affairs: https://s3.amazonaws .com/files.consumerfi nance.gov/f/documen ts/201705_cfpb_OSA _Military-Lifecycle- Report.pdf
- 49. Question #4: Other Action Steps by Generation?
- 51. Journal of Financial Planning Blog Post Source: https://practicemanageme ntblog.onefpa.org/2017/0 6/27/be-a-gen-savvy- planner-take-off-your- generational-lenses/
- 52. A Classic: Journal of Family and Consumer Sciences Article Source: O'Neill, B. and Brennan, P. (1997). Financial Planning Education Through the Life Cycle. Journal of Family and Consumer Sciences, 89(2), 32-36.
- 53. Military Saves: Financial Strategies by Generation Source: https://militarysaves.org/blog/1296-financial-strategies-by-generation
- 54. Life Cycle of Financial Planning Source: Family Economics and Financial Education: http://www.ktufsd.org/ cms/lib/NY19000262/ Centricity/Domain/94/ Life_Cycle_of_Financi al_Planning_PPT.pdf and http://mainstreetwealt hgroup.com/wp/wp- content/uploads/2011/ 12/Life_Events_of_Fin ancial_Planning.pdf
- 55. Financial Tips For Generations Source: http://www.360financialliteracy.org/Topics/Budgeting-Spending/Budgeting- Saving/Real-life-Financial-Tips-for-Different-Generations
- 58. Question #5: Other Good Generational Personal Finance Resources?
- 59. What is one significant thing that you learned today? 59
- 60. Key Take-Away for Practitioners: Don’t Impose YOUR “Social Clock” on Other People! Social Clock- “a cultural timeline of expectations of what people should do at a certain age” (William Doherty, U of Minnesota) – Late 20s/30s: “So when are you two going to have a baby?” – Late 50s/60s: “So when are you going to retire?” – Late 60s/70s+: “Are you still working? Why?” https://www.wsj.com/articles/its-ok-to-party-when- you-turn-60-1500914273 60
- 61. 61This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, and the Office of Family Readiness Policy, U.S. Department of Defense under Award Numbers 2014-48770-22587 and 2015-48770-24368.