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Monday, May 21, 2007

Bankrupt! The poor are getting younger

More stats from USA Today on the growing disparities between the rich and poor. Biggest piece of news: more than class as a deciding factor, age is growing as strong determinant for one's wealth.

--Since 1989, nearly all of the country's wealth has been accumulated by people over the age of 55

--Households headed by people 35-55 have actually lost wealth over the past 20 years due to inflation.

Together, these two facts highlight a strange reality: old people are wealthier than ever, but have not put away enough money to properly survive their (ever lengthening) lives. Young people are not making enough to keep up with inflation, yet they are paying into a system for which they will never reap the benefits.

Compiling this problem is the raised expectation for education--undergrad degree as greens fees--and the debt that comes along with it. Added burden is the pressure to invest early and consistently (cannot tell you how many terror-inducing retirement 101 seminars I've attended) in order to just survive in retirement.


jessica said...

There was an interesting piece in the Observer (13.05.07) which made a related point from a UK perspective: whilst the 50 somethings count the profits which the housing boom continues to generate, the 20 & 30 somethings count its cost.,,2078270,00.html

salina said...

Thanks for sending this link. It's an interesting situation because it's idea money, not cold hard cash--so while someone's total income might be soaring as their home value goes up, that's not money to be spent at the grocery store--I could see that quickly leading to an inflated belief of one's ability to spend--and the housing market will eventually fall...then what?

Also, wow, London is now the most expensive city in the world to purchase property!

jessica said...

Glad you could use the link - it looked like half of it had disappeared... I agree with the point you make about the dangers of believing you have more than you do, but I have to say at the moment there seems no sign of a (much needed) market adjustment in even the distant future. The truth of it in London, at least at the moment, is that there are many buyers willing to pay ever more crazy prices - and for 50 somethings with no mortgage, this looks like a win-win situation.

And yes, London is the most expensive city for property in the world - quite depressing, as I'm a 30 something who doesn't own a flat! ; )

Jason Striegel said...

There were two other interesting sociological factors that came out in that report.

One was that younger generations are waiting longer and longer before marrying, eliminating the economic benefit of a dual income, shared household.

The other factor was a little counterintuitive, but the fact that couples wait longer to have children affects their age of retirement because they end up supporting their children past their peak earning years.