Baby Boomers and Millennials are saving differently from earlier generations, and it could cause some big problems


wealthy retiree reading newspaper
Miles Willis / Stringer / Getty

At the Strategic Investment Conference
2018, John Mauldin interviewed
Neil Howe,
 best-selling author and demographics expert,
about generational changes and their effect on the

Howe said that demographics and generational factors have a huge
impact on equity prices in the long run. Not only that, he thinks
that there’s now a generational shift in wealth distribution that
could spark major political and economic disruption.

One of the examples Howe shared is that people in the 75+ age
bracket still dominate stock ownership by far. This defies
conventional wisdom that people reduce risk as they retire and
leave the workforce.

Meanwhile, Millennials have lower income and stock ownership
levels than previous generations did at the same age.

This is a key change as senior adults once had the highest
poverty rates. Younger people are now challenging that once-safe

Howe also pointed out striking differences between early and late
Baby Boomers. Those born in the mid/late 1940s inherited some of
the Silent Generation’s wealth and good fortune. Late-stage
Boomers born in the early 1960s score lower in all kinds of

Neil Howe ended  with an update on
his Fourth Turning generational
theory. He thinks we are about midway through it. From an
economic standpoint, he foresees inflation fear and Fed
tightening, which will be followed by a painful recession.

Politically, Millennials desperately want civic re-engagement.
They are seeking to completely restructure institutions. The
right wing is a brick wall on this subject and numbers have let
them hold off the pressure so far. This will change as
Millennials grow older and Boomers die.

Howe also pointed out that generational wealth transfer is going
to be highly concentrated, reflecting current wealth inequality.
Boomer wealth will flow to younger generations but the vast
majority of Generation X and Millennials will get very little.

As that happens, Howe anticipates major disruption.

Read the original article on Mauldin Economics. Copyright 2018.


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