Generation Y and Life Transitions

A person turning 25 this year was born in 1987, part of Generation Y (1981-2000).  While every person is unique, demographers note that members of a specific generation share similar general traits in terms of how they think, wish to be communicated with and treated.

Gen Yers want choices in decision making. They are circular thinkers who consider all possibilities. Multi-taskers, they are quick to want to move on to the next task.

“Moving on to the next task or phase” may involve a major life transition. Recently I asked a young woman in her early 20s to look forward over the next 10 to 15 years and tell me what challenges she foresaw—both positive and negative. Single, and fairly new in her career at a major financial services company, she mentioned the probability of getting married, starting a family, buying a first home, advancing her career, more education.

There was no note of health concerns or obligations to a loved one, although that can play into conversations with some in their twenties.

 In thinking about life transitions time frames, a person 25 is startled to realize that in ten short years he or she will be 35, and five quick years later—40! Why target age 40? A recent Wall Street Journal report (6/23/12) focused on the difficulties faced by middle-aged job seekers, noting, “The two decades between 40 and 60 are meant to be workers’ prime years for earning and building wealth, the period when they buy homes, send children to college and save for retirement.  For a person 30 this year, that time span is but 10 years away. How fast can ten years pass by? Last year was the 10th anniversary of 9/11. The memory of that tragedy is imprinted on our minds. We remember exactly where we were and what we were doing as horrific images played out on live television. Was that really ten years ago? Yes. That’s how fast time flies on this side of eternity.

Irrespective of your generation, one who is anxious to “move on to the next phase of life” should adopt Rule #2 from Steven Covey’s book The Seven Habits of Highly Effective People: “Begin with the end in mind.”

 What do you want your life to look like at age 40? Whether you are male or female, how will you balance career and family? What level of earnings and savings must you target to run your life on your own terms? As Dave Ramsey preaches, how can you avoid expensive debt outside of a sensible mortgage? Do you understand the impact of taxes and deductions from your paycheck to fund medical care and other benefits such as retirement savings? Have you considered the erosion of inflation on your savings and investment choices? Do you have ample life insurance to take care of loved ones? Do you have a will? Trust provisions for minor children? Powers of attorney for assets and health care?

 A recent federal report noted that annual child-rearing expenses for a youngster in a two-child household ranged from $12,290 to $14,320. That’s for a middle-income household with pre-tax income between $59,410 and $102,870. For a family in a lower income group the estimate is $212,370 in total expenses spread over the next 17 years to age 18; for higher earners, $490,830. The average is roughly $300,000, or $17,647 per child per year.

 For two children, that’s $35,294 a year in after-tax outlays, or $47,059 pre-tax for couples in a 25% marginal federal and state income tax bracket. Expenses do not stop at age 18! There’s college, cars, weddings, etc.

Lesson: start saving and investing early and often. Learn how money works and understand the path to financial security. Financial independence is a “do-it-yourself” project. Look in the mirror each morning and repeat, “If it is to be, it’s up to me.” Amen.

The Investment Coachä 1994, Walker Capital Management Corp. Lewis Walker is President of Walker Capital Management Corp. and Walker Capital Advisory Services, Inc., a Registered Investment Advisor (R.I.A.) Securities and certain advisory services offered through The Strategic Financial Alliance, Inc. (SFA).  Lewis Walker is a registered representative of SFA  which is otherwise unaffiliated with the Walker Capital Companies.       3930 East Jones Bridge Road ▪ Suite 150 ▪ Norcross, GA 30092 ▪ 770-441-2603 ▪ (Fax) 770-441-7936