Sunday, May 15, 2011

Financial traits of Gen X and Gen Y

    If we compare these two generations, generation x are more wise on spending with their money and a saver as well.They know how to manage their financial efficiently and saving for their money in retirement.They learn from mistakes that their parents (baby boomers) made and didn't want to end up facing a retirement crisis in later life.

Yet despite the hardships faced by their parents and grandparents — including delayed retirement, investment losses, and quality of life adjustments the majority of Generation Y members have not begun to think about retirement. What make things worse are generation Y are big spender. They spend most of their money to satisfy the urge for instant gratification. With a lot debt such as car loans, student loans and credit card loan to need pay every month, they have left with little money to save for retirement.

I would love to retire like this oldman in the future.

Generation X

   According to news reports, large numbers of late thirty and forty are migrating back to their parents' houses where they get a free roof over their heads and free use of the TVs,Internet,gym equipment and so forth. This trend is supposed to indicated that has produced a new generation of freeloaders, who lack the gumption to go out into the world and make it on their own. The so-called lost generation or Generation X, have been quietly stashing away their loot. Apparently, there was more savers in this group among their parents, the baby boomers who prefer buying things now to saving money for later. The Xers have realized that they can't count on social security and pensions to bail them out such as depend on solely on EPF for their retirement

   According to Great Eastern Life Assurance (M) Bhd executive vice-president and chief marketing officer Loke Kah Meng, only 99.9% of the contributors will withdraw their EPF savings in a lump sum and 70% will use up money in 3 years of post retirement.They've watched their parents struggle to pay off credit-card debts, and they want to avoid repeating this mistake. They seek financial independence, and they're working toward it while they're still at home, with their parents picking up the tab. This is a very positive development for Generation Y as it will definitely help them to avoid retirement crisis during end of their working career in later life.

Generation Y

   Generation Y is defined as those born between 1983 and 1991 (currently aged 20-28). These individuals are often young professionals who are at the beginning of their careers; the perfect time to start saving for retirement. Yet 73 percent of these generation currently has less than $25,000 saved for retirement.Of all the non-retired generations, including Baby Boomers and Gen Xers, Gen Y is the leader in not saving.

    According to a new survey by online investing firm Scottrade, the majority of Gen Y (55 percent) have not started to save for retirement, and fewer than a quarter (21 percent) are actively planning for retirement. Additionally, 60 percent of Gen Y saved nothing toward retirement in the last year, and 40 percent plan to save nothing in 2011. Twenty-one percent plan to save just one or two percent of their income this year.

   When a Gen Y get their salary, they use almost half their income to pay off household debts such as housing loans, passenger car loans, personal use, securities purchase, credit cards, student loans.After paying off the debt, there is only 20%-30% of total salary to spend on food, transport and emergency. Leftovers of their salary will be spend on leisure activities and habit such as watching movie, clubbing, drinking with friends, gadgets, gambling, smoking and etc. At the end of every month, Gen Y have only left a little bit of money to save for their retirement. Things are not looking good for generation Y if they continue with their spending habits.Definitely, Gen Y are not preparing for retirement anytime soon.

   The good news for Gen Y is that there’s still time on the clock.They have the advantage of Boomers’ hindsight, youth and enthusiasm. If  Gen Yers focus their interest in investing toward their retirement portfolios, there is still plenty of time for them to get where they need to go.Gen Y’s lack of action doesn’t stem from lack of awareness or interest. Almost three-fourths of Gen Yers (73 percent) realize that they are not saving enough for retirement, and previous Scottrade survey data revealed that Gen Y finds investing fun and interesting. In addition, they are the most likely to manage their own investments.
Medical Checkup for your piggy bank

   If you haven't really saving for retirement, you really need to start now. By taking account of inflation, the rising cost of living and medical expenses in future, it's better not to put your money in your saving accounts. Saving accounts usually didn't give you more than 1% of interest per year. It's better to put your money into government bonds such as ASW2020 or ASM. These government bonds will give you at least 6% of interest per year if you invest your retirement money in them. By doing so, you can reduce the impact of inflation and rising cost of living to minimal.You don't have to worry if you will losing your money by investing in these unit trust as they are government bonds (there is no way our country will going to bankrupt soon). 

   For now, just cut down your expenses as much as possible and start saving for retirement.By doing so, you don't end up like baby boomers generation who are facing a retirement crisis in their life now.


  1. i think the younger generations really have very different mindset, they opt for more impulsive actions than considering impacts on their decisions.. and we have the Gen Z that recently posted their videos bullying classmates on youtube.. :D

  2. It's sad to see gen z become like that. Hope when they grow up and more mature, they will think of consequences when decision in doing anything.


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