But rather than talk about things in a general or vague sense. I decided to sit down and write about how things have gotten worse for this generation when compared to our parents. Since I only have my life to compare it to I figured I would start there. Before I begin a little background on both myself and my parents.
I am 31 years old. I was born and raised in Southern California. I was a smart kid, always did well in school, and attended an Ivy League college. I now have an upper management position in a technology company and make a pretty good salary. I am engaged to be married to a beautiful sweet girl who attended a good university and who also has a very good job. Together, our combined salaries put us in the top few percent of all income earners. We live, with our cat, in a small two bedroom apartment. We both drive very modest cars, I have an eight year old Accord and she a four year old Corolla. We would like to buy a house but have held off because prices are still too expensive. We are frugal and save over half of our income. I have a pretty sizable retirement nest egg, something I achieved by saving diligently.
My parents were married much earlier in life. They both immigrated here as teenagers. Neither of them went to college, my father just barely passed high school. Growing up, my dad owned a small successful restaurant. My mom worked for the city. By the time they were my age, they had three children, including myself. They owned their own four bedroom home (and would soon add a fifth bedroom) and almost had it fully paid off. They had at least four cars that I can remember, including a Mercedes. They never earned more than I do (even with adjusting for inflation). Working for the city, my mom's retirement was on the way to being secured. She retired at the age of 53 with 1/2 her salary being paid to her and benefits for the rest of her life.
Just reading the two backgrounds does it not sound like something is not quite right? Mine is a fairly typical American story. I come from a hard-working immigrant family. They did well given their background and hoped for more for their children. I would be considered a success because I got into a prestigious university and I have a high paying job (my only failure being I'm not a doctor).
Given the huge advantages and success I have had when compared to my parents, one would think I live a "better" life. But look at some of the key facts.
- I don't own my own house and subsequently am nowhere near paying a mortgage off
- I don't have multiple cars or even cars of comparable stature
- In retirement, I'm on my own. There is no pension waiting for me. Further, while I may be able to retire earlier, most in my age group will retire, if they get to at all, in their 70's.
- I have no children while my parents had three at my age. I can't imagine how further behind I would be on my financial goals if I were to have had three children by now.
The story would be even sadder if I had any debt. Most of my generation does because of the high cost of college. While neither of my parent's went to college, their siblings did. My aunt tells me how she went to UCLA for just a few hundred dollars a year. My how times have changed!
I tell my story because I find it to be very relevant to the problems we now face and because it illustrates why we are not going to get out of these problems any time soon. While the housing bubble has precipitated the current problems, it was not the cause of what we are about to go through. The generation before mine lived a very good life. They lived in a world where the U.S. was the dominant economic force in the world. It was a world where U.S. citizens did not face many economic challenges from the rest of the world. High paying manufacturing jobs were not being shipped oversee. There was little foreign competition for financial assets. And the U.S. got fat off of cheap goods from around the globe. That world is not coming back. We tried to close our eyes to it. It is why so many my age took out zero down payment loans with adjustable rate mortgages. It was the only way to afford what our parents had before us. (I think the zero down actually caused our financial problems, not the adjustable mortgages but that is a different post)
The world is a tougher place now. I do not think this is a bad thing. In fact, I think it is a pretty good thing. Like all competition, there will be winners and losers. Net, a rising tide lifts all boats and there will be more winners worldwide. Notice I did not say the U.S. will be better off. In fact, I expect there to be a leveling off for Americans. We have had it so good for so long that the pendulum needs to swing the other way for us to reach equilibrium.