As you may have noticed, the blogs we write for A. Alliance Collection Agency can be eclectic and diverse. We do try and keep on subject, particularly as it may relate directly to the practice of professional debt collection. Yet we do diverge on many occasions, if for no other reason than there are many elements that go into the financial health of consumers and businesses. Keeping our clients and friends apprised of trends in credit, spending, investing and savings may help anticipate unexpected economic shifts that can significantly impact credit policy or otherwise negatively impact accounts receivable.
We have written about consumer debt levels continuing to be at historic highs. Fortunately, low unemployment and wage growth is allowing consumers to pay for their debts and, in general, bad debt is low.
That said, we have also written about the pitiful state of savings by consumers (many reporting that they have nothing in savings at all, and many more reporting that if they do it is not enough to cover even one month of expenses). On top of that, we have reported that the number one regret consumers have when they get along into that ‘certain age’ is that they have not saved enough for retirement. This implies, of course, that they expect Social Security to fully cover them in retirement, which is likely just wishful thinking.
Coming upon a recent Merrill Edge® Report (Spring 2018; read it here) written by Aron Levine we encountered an interesting subject. If they are not saving, how do consumers expect to fill in the gaps when they retire? Well it turns out, according to their research, “…one-third of Americans now say their financial stability depends on receiving an inheritance.”
Levine writes that they have been tracking savings trends for millennials, for example, for quite some time and have seen them “…pave their own path to financial freedom, often changing the way they approach traditional life milestones.” Yet in this report he points out that “Now, across all generations, we’re seeing a heavy reliance on others to achieve financial success.”
Why is that?
“Perhaps shifting priorities and longer lifespans have Americans looking to others for security” writes Levine.
That would make sense. There certainly is a large pool of wealth that is being slowly transferred to younger generations by our elders. However, anecdotally, in my own family, we have seen some of our parents age well into their 90’s. While a good long life can be a blessing, it also comes with a price as age is not always accompanied by that wonderful ‘glow’ we so long for in our later years. Prudent financial planning does not always mean that we can take a legacy to the bank. In fact, in many cases it is just the opposite as costs of long term care are very high and can drain any legacy pretty fast.
How does this expectation break down by age? The report divides it thusly (percentage waiting on an inheritance):
- Gen Z (Ages 18-22): 63%
- Millennials (23-40): 32%
- Gen X (41-53): 37%
- Baby boomers (54-72): 20%
Two other interesting notes from Levin:
- “Despite describing their approach to financial decision making as ‘do-it-myself’ (87 percent), Gen Z, today’s youngest generation, is more than twice as likely (63 percent) to depend on an inheritance.”
- “Gen Zers aren’t just looking to mom and dad for money?they are also counting on their friends (17 percent, compared to 4 percent nationally), grandparents (17 percent, compared to 6 percent nationally) and extended family (14 percent, compared to 5 percent nationally).”
We should all be so fortunate to have relatives and friends that we expect to help us out in our later years. Nonetheless banking on an inheritance seems to be an unsound plan to provide for a sustainable future.
Yet it is one more piece of the puzzle that is now taking shape that seems to show our future generations need to take reasoned action and take it now to ensure they have the resources they need to live their own long lives.
A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners. Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 12 years.