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World Financial Group

The state of financial literacy

August 19, 2019

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Sizing them up – how do four generations compare financially?

July 15, 2019

Sizing them up – how do four generations compare financially?

It’s probably safe to say that how we see the world financially is partly due to our age, but also a product of how we see the world itself, including our prospects for the future.

Perspectives drive financial decisions just as much as the math – and may perhaps have an even greater effect than we realize.

Here’s a quick breakdown on how recent generations are grouped by birth year:
Boomers: 1946 to 1964
Generation X: 1965 to 1976
Millennials: 1977 to 1995
Generation Z: 1996 or later

With Boomers leading other generations by up to 50 years – or even longer – it’s not surprising that there are some stark differences in financial statistics – including net worth, savings rates, home ownership, and household debt.

When it comes to savings, nobody does it better than Boomers. A 2017 survey found that Boomers had more stashed away in savings than younger generations, with people age 65 and over having the highest amounts saved.[i] Nearly 40% of seniors surveyed had over $10,000 saved. Older GenXers followed, with nearly 25% having over $10,000 saved. By contrast, only 13% of young Millennials had over $10,000 in savings, with 67% having less than $1,000 saved, and nearly half having nothing saved at all. (It should be noted that older generations have had more time to save, which may give some insight into the weaker stats for younger generations.)

It’s early in the game, but GenZ, the youngest generation, may end up showing everyone else how it’s done when it comes to savings. Over 20% of this tech-savvy and financially prudent generation has had a savings account since age 10.[ii]

Renting versus home ownership is another area of wide divergence. Millennials outpace older generations when it comes to the nation’s population of renters. Of the nearly 46 million households that rent, 40% are headed by Millennials.[iii] However, 93% of Millennials state that they’d like to own a home – someday. Evidence suggests that some Millennials who have been biding their time are starting to see opportunity in real estate. In recent years, Millennials have been the largest group of home buyers, representing 40% of the buyers. This has been fueled in part by investment real estate purchases.[iv]

Younger generations have the benefit of seeing the household effects of debt in a financial downturn. They have witnessed that debt doesn’t go away when unemployment goes up or family members lose jobs. Although credit utilization is up, credit card debt for Millennials is only about half of the amount carried by Boomers and GenXers, and GenZ is even lower at just over a quarter of the credit card debt carried by Boomers and GenXers, both of which have similar credit card debt burdens.

Conventional wisdom tells us we learn from our elders. But perhaps the truth is that we can learn from every generation, each with its own perspectives driving their financial decisions.

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[i] https://www.gobankingrates.com/saving-money/savings-advice/half-americans-less-savings-2017/
[ii] http://3pur2814p18t46fuop22hvvu.wpengine.netdna-cdn.com/wp-content/uploads/2017/04/The-State-of-Gen-Z-2017-White-Paper-c-2017-The-Center-for-Generational-Kinetics.pdf
[iii] http://www.pewresearch.org/fact-tank/2017/09/06/5-facts-about-millennial-households/
[iv] https://www.forbes.com/sites/christinecarter/2017/07/26/how-real-estate-investing-is-spurring-millennial-home-ownership/#5931ba68d445

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Millennials: Getting Your Money to Work for You

Millennials: Getting Your Money to Work for You

If you feel like you make less money than your parents did at your age… You’re probably right.

A new report from Young Invincibles revealed that Millennials have a median income of $40,581 – 20% less than what Baby Boomers were making in the same life stage. It’s probably no great surprise that Millennials have less…

Less money to spend. And less money to save.

You know that saving is important for your future. Retirement may seem far away, but it’s coming. So what do you do with the money you should be saving now?

This is where a little-known formula called “The Rule of 72” comes in…

Here’s how it works: Take the number 72 and divide it by the annual interest rate. The answer is approximately how many years it will take for money in an account to double.

For example, applying the Rule of 72 to $10,000 in an account at a 4% interest rate would look like this:

72 ÷ 4 = 18

That means it would take approximately 18 years for $10,000 to grow to $20,000 ($20,258 to be exact).

This formula really shows the value of finding a higher interest rate, doesn’t it?

Here’s the breakdown (tl;dr - too long; didn’t read):

  • You probably earn less than your parents did at your age.
  • You’ll probably have less money to set aside for retirement.
  • But you can make what you do save work for you.

If you start early, you have the potential to be well-prepared for your retirement. Contact me today, and together we can discuss how to get your money to work for you!

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The Millennials Are Coming, the Millennials Are Coming!

February 12, 2018

The Millennials Are Coming, the Millennials Are Coming!

Didn’t do so well in history at school? No worries.

Here’s an historical fact that’s easy to remember. Millennials are the largest generation in both Canada and the US. Ever. Even larger than the Baby Boomers. In Canada, those born between the years 1980 to 2000 number over 9.5M¹ and in the US, 92M.² These numbers dwarf the generation before them: Generation X at 7.2M in Canada and 61M in the US.

When you’re talking about nearly a third of the population of North America, it would seem that anything related to this group is going to have an effect on the rest of the population and the future.

Here are a few examples:

  • Millennials prefer to get married a bit later than their parents. (Will they also delay having children?)
  • Millennials prefer car sharing vs. car ownership. (What does this mean for the auto industry? For the environment?)
  • Millennials have an affinity for technology and information. (What “traditional ways of doing things” might fall by the wayside?)
  • Millennials are big on health and wellness. (Will this generation live longer than previous ones?)

It’s interesting to speculate and predict what may occur in the future, but what effects are happening now? Well, for one, if you’re a Millennial, you may have noticed that companies have been shifting aggressively to meet your needs.³ Simply put, if a company doesn’t have a website or an app that a Millennial can dig into, it’s probably not a company you’ll be investing any time or money in. This may be a driving force behind the technological advancements companies have made in the last decade – Millennials need, want, and use technology. All. The. Time. This means that whatever matters to you as a Millennial, companies may have no choice but to listen, take note, and innovate.

If you’re either in business for yourself or work for a company that’s planning to stay viable for the next 20-30 years, it might be a good idea to pay attention to the habits and interests of this massive group (if you’re not already). The Baby Boomers are already well into retirement, and the next wave of retirees will be Generation X, which will leave the Millennials as the majority of the workforce. There will come a time when this group will control most of the wealth in Canada and the US. This means that if you’re not offering what they need or want now, then there’s a chance that one day your product or service may not be needed or wanted by anyone. Perhaps it’s time to consider how your business can adapt and evolve.

Ultimately, this shift toward Millennials and what they’re looking for is an exciting time to gauge where our society will be moving in the next few decades, and what it’s going to mean for the financial industry.

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Sources: ¹ Norris, Doug. “Millennials: The Newest, Biggest, and Most Diverse Target Market.” Environics Analytics, 2015, http://www.environicsanalytics.ca/docs/default-source/eauc2015-presentations/dougnorris-afternoonplenary.pdf?sfvrsn=6%20. ² “Millennials: Coming of Age.” Goldman Sachs, 2018, http://www.goldmansachs.com/our-thinking/pages/millennials/. ³ Ehlers, Kelly. “May We Have Your Attention: Marketing To Millennials.” Forbes, 6.27.2017, https://www.forbes.com/sites/yec/2017/06/27/may-we-have-your-attention-marketing-to-millennials/#409e42331d2f.

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Some Numbers Are Hard to Believe – Like These!

August 21, 2017

Some Numbers Are Hard to Believe – Like These!

1.32 billion people log in to Facebook every day.

Apple has now sold over 1 billion iPhones. Google processes 1.2 trillion searches every year. And – perhaps the most difficult to believe of them all – the world hotdog eating record stands at 70 dogs in 10 minutes. I apologize ahead, but just visualize that. Seven hotdogs down the hatch every minute.

Here’s another number that’s almost beyond comprehension: 56% of Americans have less than $10,000 in retirement savings. You may be thinking – how can that be? Sadly, it’s true. Here’s another number that’s hard to… swallow (again, I apologize). One out of 4 Americans 65 and over rely on Social Security as their only source of retirement income. Yes, you read that right – 25%! It’s no wonder that 60% of Baby Boomers are more afraid of outliving their money than dying.

Why share these hard to believe numbers? To motivate you – at whatever age you are today – that you can start saving more right now. If you want to have a million dollars at the age of 65, how much do you need to start saving every month? That depends on your current age. If you’re 25, you’ll need to save a minimum of $158.12 per month. At 35, the amount jumps to $442.00 per month. At 45, it’s $1,317 monthly. At 55, you’ll have to save $4,882.00 per month. And at 60, you’d have to save $12,913.00 every month.

How much do you need to save to hit your goals? What’s the right financial vehicle to help you do it? Those are important questions. Best not to wait to find the answers. Contact me, and let’s get to work on a strong insurance strategy.

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