More Gen X, Millennials, And Gen Z Living Paycheck To Paycheck
A new study from Goldman Sachs found that a growing number of Gen X, millennial, and Gen Z workers are living paycheck to paycheck.
According to CBS News, about 42% of workers across Gen X through Gen Z have no savings after covering their basic living expenses. This is a significant increase from 1997, when only 31% of workers reported living paycheck to paycheck. Goldman Sachs interviewed 3,600 workers and 1,5000 retirees for the survey. Given the current trend of the U.S. economy and the ongoing increase in living expenses, the financial institution projects that the number of American workers living paycheck to paycheck could increase to over half by 2033.
Growing up during the 2010s, the most common financial advice given to millennials generally boiled down to “make coffee at home” and “skip that avocado toast.” As someone who always made coffee and breakfast at home and still found that my office job barely covered my living expenses, I’m happy to hear that financial experts are finally realizing that improving one’s economic health isn’t as easy as skipping a latte.
“These findings force us to ask a very critical question: Does the retirement math still work? The answer is no,” Greg Wilson, head of retirement at Goldman Sachs Asset Management, said in a conference call regarding the report. “Telling workers just to ‘save more’ ignores the realities they face.”
In 2000, homeownership only took up to 33% of a worker’s income. That number has now increased to 51%. Health care costs have increased from 10% to 16% of after-tax earnings during that same timeframe. This falls in line with an analysis conducted by the Ludwig Institute for Shared Economic Prosperity earlier this year that found a “minimal quality of life” is out of reach for the bottom 60% of American households who have annual incomes of $100,000 or less. Researchers found, this is largely due to stagnating wages decreasing workers’ buying power.
The Goldman Sachs study also found that half the Gen X workers they surveyed believed it would take a “miracle” for them to be able to retire. This is partially due to half of all U.S. workers in the private sector not having access to employer-sponsored retirement plans.
While the economic reality for Gen X, millennials, and Gen Z isn’t great, Goldman Sachs did have recommendations that could benefit future generations.
From CBS News:
Some approaches may be out of reach for older workers, like Gen X and millennials, but could be of use for their children — for instance, setting aside $500 a year from ages 1 to 20, a move Goldman found could increase retirement savings by 14%.
Adding private market investments to a portfolio could also help boost retirement savings by 14% through higher returns, according to Goldman. Those strategies might become more accessible for workers under a Trump administration plan to open up 401(k) plans to private equity, cryptocurrencies and other alternative investments.
Lastly, if possible, workers should take advantage of benefits from their employers such as funding an emergency savings account, which can help them avoid raiding their 401(k) in case of an unexpected expense, such as medical bills, the bank notes.
The American economy has only increased its hostility toward the average worker, and unfortunately, we’re under an administration that is only making things harder with an erratic tariff policy and willingness to put hundreds of federal workers out of jobs.
SEE ALSO:
The Rise Of Job-Hugging: Why Gen Z Workers Are Clinging To Current Roles
Black Americans Need Better Credit Access, Study Finds
More Gen X, Millennials, And Gen Z Living Paycheck To Paycheck was originally published on newsone.com
