Forever Young (and Uncertain)

By Ashley Bleckner, CFP®, MA

“The times they are a-changin.” When examining Bob Dylan’s 1964 lyrics through an economic lens, they still ring true with today’s changing economy and globalization, leaving us with more questions than answers. What will the workforce in the US look like in 20 years with the rise of automation? How will growing foreign economies (like India and Brazil) affect the global landscape? Is the very technology that is making our lives easier going to have positive or negative long-term economic and social effects? The future has both exciting opportunities and degrees of risk. For young people, this also means uncertainty when trying to plan for their financial futures.

There are so many options for younger generations – each decision bringing them closer or further away from reaching their goals. So, what can these individuals and families do other than simply hoping that their financial choices will work out for the best?

To better understand some of the challenges facing young people, let’s look at an example with John and Meghan. They’re both in their 30s and were married three years ago. Meghan is a nurse in the ER and John is a marketing specialist. Up until this point, they’ve enjoyed a lifestyle supported by two incomes. Without children, they’ve been able to be somewhat carefree about their spending. But now they are contemplating buying a home and having children.

These life changes raise questions about the immediate financial implications, as well as their financial future. Although their jobs seem relatively secure, they have friends who work for companies that have experienced significant downsizing. Moreover, some of their friends are going through cash flow transitions, like fluctuating incomes from job changes and/or increasing expenses.

Discussions with family and friends have led them to the conclusion that uncertainty may be the defining characteristic of their generation. Young people are facing a new reality, one with much more uncertainty about the future than that faced by previous generations. Some of this uncertainty is tied to rapid technological changes. Others are the result of realizing that people may be personally responsible for providing for themselves much of what was previously provided by others (i.e. pensions, Social Security, Medicare, etc.).

There are many issues facing John and Meghan, and they’ll need to ask themselves some difficult questions: Will they go through career transitions over the course of their working lives? Is there a way to protect themselves financially? How difficult will it be for them to save for a child’s education? They both participate in 401(k) plans at work, but will they be able to save enough for a comfortable retirement?

A good first step for a couple like John and Meghan is to sit down and discuss their thoughts and feelings towards these difficult questions. By doing so, they will arrive at a realistic assessment of what they should and should not do financially, what they can and cannot afford, and what sacrifices they might need to make to assure financial security for both today and tomorrow. They know that their spending choices will have to be made carefully, and that preparing for a bright financial future will require setting goals now.

Another important step to consider is financial education. Unfortunately, many times these foundational financial topics are not taught in school, even though they apply to everyone. So, individuals must seek out the information themselves. When equipped with the right financial knowledge, it can be incredibly empowering; and it can allow us to enter into decisions confidently.

As young couples continue down the road of finances and look to expand their families, they can be a bit more optimistic about their future. “The times they are a-changin,” but couples can look to the future with enthusiasm, especially when they have established goals and developed a financial pathway to reach them.

The RS Crum team is here to help.