How Different Generations View Financial Stability
According to a recent report from the Financial Health Network, 4 in 5 Americans were financially unhealthy at least once over the last 5 years (2018-2022).
However, each generation has its own definition of what it means to be “financially healthy”.
Understanding these differing perspectives is crucial for financial advisors seeking to cater to diverse client needs.
A recent survey from Personal Capital, a personal finance company, in collaboration with Empower, a retirement plan provider, shed light on fascinating generational insights. The results revealed varying perceptions of financial health thresholds and savings goals for different generations.
Generational Perspectives on Financial Stability:
|Generation||Financial Health Threshold||Savings Goal|
The table above illustrates the financial health threshold (the amount they believe is necessary for feeling financially healthy) and the savings goal. Interestingly, as the financial health threshold decreases with each generation, the savings goal increases, revealing a reverse trend in their perceived financial security.
This article delves into the survey findings to explore the contrasting perspectives across Gen Z, Millennials, Gen X, and Baby Boomers.
By comprehending these unique viewpoints, financial advisors can better tailor their services to support clients in achieving their financial goals.
Gen Z: Aspiring to Financial Success
Survey findings indicate that Gen Z, the youngest generation, sets a high bar for financial stability, with an average perceived threshold of $171,633. From gender identity to climate change action, Gen Z shoulders significant responsibility from earlier generations and is posed to be the generation that will make key decisions for the future of society.
“This generation’s ambitious outlook may reflect their desire to tackle student loans, invest in education, and enter the housing market early,” said Glenn Werner, Vice President of Investments at David Lerner Associates, Inc.
Surprisingly, Gen Z envisions requiring the lowest amount in savings ($105,299) to feel financially secure. Their confidence might stem from the growing emphasis on financial education and early savings strategies.
Millennials: Striving for Progress
Often characterized as financially cautious, Millennials believe they need an average of $133,758 to achieve financial health.
Digital-first and social media-savvy, millennials have experienced economic turbulence and student loan burdens, leading them to prioritize financial security.
In contrast, their expected savings amount of $349,784 suggests that they are actively working towards long-term financial goals, including homeownership, retirement planning, and family preparation. Market intelligence platform CB Insights predicts that by 2030 Millennials are expected to control as much as $20T in global assets.
Gen X: Balancing the Present and Future
Gen X displays a pragmatic approach, indicating a lower financial threshold of $112,222 for feeling secure.
Gen Xers are in their prime earning years or nearing early retirement. This is the generation that witnessed the birth of mobile phones, the dawn of the internet, ATMs and credit card debt. They’re caught between caring for aging parents and supporting their own families and tend to focus on immediate financial needs.
Interestingly, Gen X envisions a significantly higher savings requirement ($566,975), indicating their intention to focus on retirement planning and long-term financial independence.
Baby Boomers: Contentment in Simplicity
Mostly retired or getting close to retirement, Baby Boomers perceive a relatively lower financial threshold of $78,317 for achieving stability.
Having experienced different economic eras, this generation may prioritize financial freedom over material wealth.
While requiring the highest savings amount ($764,999), Baby Boomers’ outlook suggests contentment with modest aspirations, prioritizing financial security over extravagant living.
The Personal Capital survey paints a vivid picture of how various generations view financial stability. While each generation seeks financial security, their perceived threshold and savings goals vary significantly.
Gen Z strives for financial success, Millennials focus on progress, Gen X balances the present and future, and Baby Boomers find contentment in simplicity.
As a financial advisory and investment firm, comprehending these diverse perspectives empowers us to tailor our services to meet the unique needs and aspirations of our clients.
Through customized financial planning and guidance, we can help individuals across generations achieve their financial objectives, navigating life’s financial journey with confidence and clarity.
Remember, seeking professional financial advice can be a valuable resource when creating a financial blueprint.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.