NEWS AND TRENDS
GEN X AND GEN Y
Financial Goals and Actions
In Conflict
Saving for retirement is a goal, but managing everyday finances takes priority.
Preeti Vasishtha
Gen Xers (consumers born between
1965 and 1981) and Gen Yers (those
born between 1982 and 1994) are often
conflicted between their intentions and
actions when it comes to how they view
and make decisions about money, a new
Fidelity Investments research study says.
Both Gen Xers and Gen Yers, whose
combined population will represent 60
percent of the U.S. workforce by 2010,
named money (77 percent of Gen Xers, 74
percent of Gen Yers) as their biggest concern, well above the concern about family relationships or health care. However,
money doesn’t drive their career choices.
Both Gen Xers and Yers agree that their
career decisions are primarily driven by
their quest for work/life balance ( 70 percent Gen Yers, 63 percent Gen Xers).
Saving a goal, not a priority
About half of Gen Xers and Gen Yers ( 55
percent of Gen Xers, 44 percent of Gen
Yers) say that saving for retirement is a
current obligation or goal, the research
says. However, more than half ( 51 percent
Gen Xers/Yers) indicate that other financial priorities prevent them from saving
for retirement. When compared to saving for retirement, managing everyday finances, making mortgage payments and
managing credit card debt all rank higher as crucial goals for both Gen Xers and
Gen Yers. For Gen Yers, saving for retirement is even less crucial, with making car
payments, paying off school loans and
saving for a home ranking higher.
“Debt prevents saving in older generations as well, but it’s especially a challenge
for Gen X and Y,” says Pamela Norley, executive vice president, Fidelity Consulting Group. “Our research revealed that
younger generations are more likely to use
credit than save for short-term purchases,
which results in an ongoing struggle with
debt management.”
Most Gen Xers and Yers don’t feel
confident that they are making solid financial decisions, the research says. More
Continued on Page 33
FACTS AND FIGURES
MEDICAID’S LONG-TERM CARE COSTS RISING
State Medicaid programs will spend $1.6 trillion on
long-term care expenses over the next 20 years, according to a study by America’s Health Insurance Plans.
Total government expenditures on long-term care will
exceed $3.7 trillion, including federal matching funds.
Based on current policies and trends, Medicaid’s annual long-term care expenditures will grow by 124 percent from $51.5 billion to $115.6 billion between now
and 2027. This year alone, 15 states are expected to
spend $1 billion on Medicaid long-term care services.
By 2027, 25 states will be spending $1 billion or more,
AHIP says. States with the highest projected expenditures over the next 20 years include New York ($271 billion), California ($230 billion) and Pennsylvania ($104
billion). States with the fastest-growing Medicaid long-term care expenses are Alaska ( 7 percent), California
( 6. 4 percent) and Arizona ( 5. 9 percent). Costly medical
treatment and aging Baby Boomers are contributing
to the increase in Medicaid expenditures. In addition,
many Americans have not purchased long-term care insurance, even though studies show that a 65-year-old
today has a 70 percent chance of needing long-term
care, and the average annual stay in a nursing home
costs $75,000, according to AHIP.
JULIE BRITT
EMPLOYERS INCREASE BENEFITS EDUCATION
Employers will increasingly offer targeted communication programs to educate employees on the
merits of their voluntary benefits, according to the
Study of Employee Benefits: 2008 & Beyond, a report from Prudential Financial Inc. The report examines current and future employee-benefits trends and
employers’ responses. This information can help plan
sponsors, worksite-benefits advisors, brokers/consul-tants, third-party administrators and other key stakeholders develop their business strategies, Prudential
says. Plan sponsors reported a 22-point increase, from
34 percent in 2008 to 56 percent in 2013, in the importance of increasing employee education about
benefits selections. In addition, targeting communication and enrollment to various employee segments increased from 24 percent in 2008 to 39 percent in 2013.
The study also notes the increasing influence of an
aging and multigenerational work force on benefits
programs. Today, only 21 percent of plan sponsors cite
a multigenerational work force as highly important,
and 27 percent cite an aging work force as highly important. However, the perceived importance of a multigenerational work force nearly doubles in five years
among plan sponsors.
