In my twenties, before marriage and children, “the future” was the next weekend. Horizons change as life progresses. Generation Y, the Millennials, were born between 1980 and 2000. The leading edge of the 77 million strong Gen Y cohort turns age 33 in 2013. In ten short years, they will be 43 and ten years beyond that, 53.
The youngest of the Millennial generation turns 13 in 2013, a major cost center for parents who must fund teaching them to drive, providing cars, educations, and the other expenses related to children still in the nest. For parents it is startling to realize that their new teenager will be age 23 in ten short years, and 33 ten years after that.
For the now 33 year old, and the other Gen Y adults ranging in age from 18 to 32, what challenges do you see in the next ten years, both positive and negative? Concerns may range from financing college and perhaps graduate education, landing the right job and career advancement, paying down debt, capital accumulation, marriage, buying a first home, starting a family if one does not already have a child, and balancing working with quality of life.
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Millennials age 18 are adults under the law in most states. While many may remain on their parents’ health insurance plan until age 26, a Power of Attorney for Health Care should be in place. The document should reference privacy rules under the Health Insurance Portability and Accountability Act (HIPAA). The Act establishes national standards to protect individuals’ medical records and other personal health information. The rule requires safeguards to protect the privacy of health information, limiting disclosures without patient authorization. Parents of newly minted 18 year olds are shocked to learn that if a son or daughter is involved in a serious accident or lands in the hospital for any reason, they cannot even get status. The facility only wants to know, “Who is going to pay the bill?”
Drivers should be covered under Umbrella Liability on car insurance policies in the event of a serious accident and a lawsuit beyond basic liability limits provided on a standard policy. Oftentimes the maximum liability protection is $100,000 per person and $300,000 per incident. All you have to do is notice the lawyers advertising on cable television. “One call, that’s all, and I will get you a big check,” goes the pitch. Not amusing if you are being sued!
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Many Millennials grew up during the “lost decade” in the stock market, witnessing the “tech wreck” bust and the debacle of 2008. Supposedly wary of investing in equities, nevertheless participation in the stock market via 401(k) and other retirement plans is on the rise. That is a positive development as the earning power of Millennials grows.
By 2025, according to Employee Benefit Advisor magazine (June 2013), Millennials will comprise 75% of the entire workforce. A 5/13/13 report from Bank of America (Merrill Edge) indicated that Gen Y is saving aggressively and they are “optimistic about their retirement savings potential.” Many suspect that full retirement under Social Security for them will be pushed out to age 70, with benefits potentially reduced or means tested.
Basic what if? planning should be emphasized. What if I am disabled or deceased? Life insurance and disability income insurance should be part of a plan along with a will and Powers of Attorney for assets and health care.
While inflation today is low by historical yardsticks, long-term erosion of purchasing power is a danger to financial freedom. Millennials, because of longer time frames related to retirement, must pursue an investment policy that allows for positive returns net of inflation and taxation. With today’s low interest rates, that’s a challenge. Stocks should be a cornerstone investment.
Some wag suggested, “Life is what happens while you’re looking at your Smartphone.” Do you have a solid financial plan related to the future that you envision?
Lewis Walker is President of Walker Capital Management LLC. 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 ▪ Peachtree Corners, GA 30092 ▪ 770-441-2603 ▪ lewisw@theinvestmentcoach.com