From the Magazine: Your Money, Your Self

The big goal is the same: FINANCIAL SECURITY. What those words mean and what you should do to achieve the goal varies, not the least from generation to generation.

Money. It’s the bane and blessing of us all.

And, like your health, the other primary concern of all humans, your money, otherwise known as your personal finances, is highly individualized. No two of us have the same assets, debits, career paths, earning capacity and longevity. No two of us have the same hopes and dreams. There is no one-size-fits-all budget plan. Each generation has its own set of specific challenges to face.

Boca magazine talked to financial advisers of all kinds to gather general trends and tips—about banking, budgeting, loans and credit, renting or buying, retirement, insurance, taxes—for South Floridians, from Boomers to Generation Z.

OK Boomers

Born between 1946 and 1964, their parents were the so-called “Greatest Generation”—the now-elder statesmen and women who tended to stay with one profession, sometimes one employer. This generation lived through the Great Depression and made the world safe for democracy in WWII—when they got home, America’s future was shining. They bought houses with help from Uncle Sam and had lots of babies. Hence the Boomers.

This generation is defined by the Kennedy and Martin Luther King assassinations, the Civil Rights movement, the Women’s Rights movement (including Roe v. Wade) and the Vietnam War. Many were in or protested the War and were basically optimistic, believing they could effect change. They inherited good educational and economic opportunities. The Watergate scandal and economic difficulties beginning with the oil embargo in 1979 resulted in an increasing focus on self-help as belief in government and institutional solutions decreased. The AIDS epidemic reinforced this lack of trust. Boomers, because of their sheer numbers, set trends and influenced marketing and attitudes.

FINANCIAL CONSIDERATIONS:

ON THE VERGE OF RETIREMENT OR RETIRED: How much will that social security check amount to? How much do you really need to live comfortably? This is a time to do some serious arithmetic: Add up your expenses and which ones are expendable, gather the numbers from your 401K or other retirement accounts, figure out how much you’ll need to supplement your income and when (or if) you’ll be able to retire. And remember how much longer we live (78 years, right now).

FIGURING OUT SOCIAL SECURITY: This is way more complicated than it ought to be. Make an appointment (you’d be in line for days) with a social security agent and get the hard news about what you’re owed, what your spouse is owed and when is the best time to start drawing it.

FACING MEDICAL EXPENSES ASSOCIATED WITH AGING: Some people set money aside for the costs of aging, and insurance policies can be tailored to include long-term care policies or riders to cover chronic illness.

Even with Medicaid and your auxiliary insurance, there will be some out-of-pocket expenses. Our bodies wear out as we age—that’s just a natural fact, and maintenance and repair is up to you.

OFTEN DIVORCED OR SEPARATED: How your ex figures into your finances can be as complicated as a relationship, so talk to a lawyer or a financial consultant to see what your personal situation is.

STILL HELPING OUT ADULT CHILDREN: “Failure to launch” is a real thing, and lots of Boomers still have grown children living in their basements playing World of Warcraft most of the day. To plan your own financial future, you need to get them to plan theirs. In other words, start charging rent and expenses.

PLANNING YOUR LEGACY: What will happen after you’re gone is part of your financial planning. “Everyone has different objectives,” points out Brandon Opre, CFP, financial advisor with TrustTree Financial in Fort Lauderdale. “Some clients want to spend every last dime that they have and not worry about anybody else, but I’d say more often than not there are kids and grandkids in the mix that they’d like to leave a little bit better off. What I’m seeing more of now is people giving their money away while they’re alive, if they have the means to do so. A 65-year-old couple might want to help out their 30-year-old kids and their newborn grandkids now, when they need it the most, rather than wait until they’re in their 90s and they die.”

Generation X

This first generation of “latchkey” kids, born between 1965-1979, experienced the consequences of social changes pushed for by their parents. Both parents worked, so these kids went to daycare. This generation has the lowest voting participation rate of any generation and, according to Newsweek, “dropped out without ever turning on the news or tuning in to the social issues around them.”

They’re entertainment-educated, thanks to MTV, cable and video. Their parents’ high divorce rate may have engendered Gen X’s skepticism about marriage and other social institutions characterized by a “what’s in it for me” attitude. Still, Gen Xers get married, or cohabit, anyway. They tend to be well-educated—29 percent have a bachelor’s degree or higher. They are committed to a work-life balance. They’re informal, direct, cynical and self-reliant. Most should be at their economic peak now—in their 40s.

FINANCIAL CONSIDERATIONS:

RAISING A FAMILY: Though they started later than generations behind them, Gen-Xers are having children and raising families. But that simple-sounding life is a lot more expensive than it used to be. Tuition costs start early, with preschool, and don’t stop until after college graduation. According to the U.S. Department of Agriculture, it costs around $233,600 to raise a child. And that’s excluding college. Before even having a baby, financial experts recommend setting aside six months of salary. Then budgeting and planning.

PAYING DOWN STUDENT DEBT: Although this generation is more established in the workplace than their parents were when they started families, chances are good they still have student debt to pay down. You’ll find lots of possibly conflicting advice on the best way to do this and to figure out the best path for you. Consult an expert to help you set goals and accomplish them. “We encourage everyone to establish a budget and stick to it,” say Barbra Shaffer and Carole Enisman-Ryan, managing partners at Premier Wealth Planning in Fort Lauderdale. “Paying the high cost of debt is a tremendous waste of money.”

CARING FOR AGING PARENTS: This generation’s parents tend to be a little older than previous generations who started families at a younger age. So often, they’re squeezed between raising a family and figuring out care for increasingly infirm parents.

BUYING A HOUSE: Buying a house was once considered the gold standard, and the most important investment that one could make. The wisdom now is that real estate should fit your life goals, and schools of thought differ. Shaffer and Enisman-Ryan believe that “diversifying your portfolio and including real estate as a holding—even if it is your personal residence—is a good long-term investment.” But as Opre sees it, owning a home isn’t quite as important these days. “For my parents and grandparents, it was always the American dream to buy a home, he shares. “I think that’s a little bit overblown and may not be as in vogue these days–especially if you purchase an expensive property and become house-rich, cash-poor.”

Millennials

Born between 1980-1994, this is the largest generation since the Baby Boomers. Millennials are known as incredibly sophisticated, technology-wise, and impervious to most traditional marketing and sales pitches. They have been there, done that since childhood. Millennials expect racial and ethnic diversity, but they are more segmented as an audience because of the expansion of cable TV, satellite radio, the internet, social media, etc. They still watch TV, but prefer streaming or on demand; they want it their way.

Because the internet presents so many choices, Millennials are less brand-loyal—they tend to think globally. Accustomed to praise, used to multitasking, less traditionally materialistic, Millennials are flexible, changing their fashion, style consciousness and where and how they are communicated with. Millennials are often raised in dual-income or single-parent families, so they are more likely than previous generations to be involved in family purchases, of everything from groceries to new cars. One in nine has a credit card co-signed by a parent.

FINANCIAL CONSIDERATIONS:

A DIFFERENT DEFINITION OF SUCCESS AND DIFFERENT LIFE GOALS: The old model was to scrimp and save for decades before ending one’s career and settling into retirement. “I think the way Millennials view retirement is different than their parents or grandparents viewed it,” Opre shares. “They don’t want to work 40 years of their life, get into their 60s, and then retire and do nothing. I think this generation is more inclined to have some kind of a side hustle or passive income. They might work less hours but longer years, or they define retirement a little bit differently.”

HOW TO SAVE: Budgeting and adhering to a spending plan are crucial during prime money-making years, and Millennials have more tools at their disposal—and more willingness to take advantage of them—than prior generations. “I think millennials can accomplish a lot using technology and online using virtual platforms,” Opre says. “They might be more inclined to use that technology for budgeting, or saving, or even robo-advising.”

ALIGNING VALUES WITH INVESTMENTS: This generation’s concern is not only with making money but with earning it in a way that reflects what’s truly important to them. Putting their money in green companies, companies with a conscience, may be more appealing than investing in a company that makes a slightly greater percentage.

HOW TO GET ADVICE: Most Millennials seldom set foot in brick-and-mortar banks, opting instead to conduct their financial lives online, but this can be a detriment. “Online advice is very generic,” Shaffer and Enisman-Ryan share, “but everyone’s financial scenario is unique. How can you possibly buy into a one-size-fits-all plan and expect it to be successful?”

BUILDING CREDIT: It’s easier to budget when you live on a cash basis, but at some point you have to build a credit history. Getting a credit card with a low limit and paying it off completely every month is an easy way to build good credit history. You’ll need it eventually.

Women

Not a generation but still in an economic category of their own, female financial considerations are complicated and compromised by the gender inequity that persists in the United States despite protestations of equality. A couple of generations ago, we wouldn’t have thought to have a separate financial category for women, because they were an economic unit with their husbands. Until 1974, single women couldn’t get their own credit cards.

Women often first start thinking about financial planning when they’re in transition: divorced with a big settlement from the split of a house. Income halved because of the household breakup. Often they have no separate retirement account, no emergency savings account. There is still a significant earnings differential between men and women.

FINANCIAL CONSIDERATIONS:

FINANCIAL LITERACY: For most women, there is a financial literacy gap. This isn’t entirely due to marriage or life circumstances—financial information is more often offered to men than women. Increasing your financial literacy—understanding investments, money markets, budgeting, etc.—is the most important thing you can do to ensure your independence. Some institutions even have special workshops for women.

DIVORCE PLANNING: Women are more likely to lose money after divorce. That’s just a fact, and though no one, especially women, actually plans on a divorce, women should make sure their marital finances are equitable.

LONG-TERM HEALTH CARE: Statistically, women live longer than men. Whether you’re single or married, you need to take that into account. “Unfortunately, we don’t have an expiration date,” Shaffer and Enisman-Ryan share. “When we develop a long-term financial plan for clients, we always run our scenarios much longer for women. It’s important to plan for longevity and be sure that you don’t run out of money.”

This story is from the April 2021 of Boca magazine. For more content like this, subscribe to the magazine.