Who are baby boomers - the gloomiest generation to pass on a fortune with trillions of dollars?
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Who are baby boomers?
Following World War II, there was a "baby boom", which gives this generation their nickname.The increased birth rates make them a large portion of the population, and they are typically born between the early to mid 1940s, to 1960 - 1964.
During the boom, almost 77 million babies were born in the United States alone, comprising nearly 40% of the American population.
This rapid rise in births is attributed to many causes. In some cases, those who wanted families had waited until after the war was over to have children. By this time, the Great Depression’s economic turmoil and the war were finally subsiding. Soldiers returned home ready to start families and hoped to provide a better life for their children. Through the G.I. Bill, many veterans were afforded economic and educational opportunities, allowing them to own homes and support children.
|Photo: Community College Review
Most historians say the baby boomer phenomenon most likely involved a combination of factors: people wanting to start the families that they put off during World War II and the Great Depression, and a sense of confidence that the coming era would be safe and prosperous. Indeed, the late 1940s and 1950s generally saw increases in wages, thriving businesses, and an increase in the variety and quantity of products for consumers. Investopedia reported.
They benefited from a time of increasing affluence and higher levels of income than their parents, and a surge in consumerism, enjoying more money to spend on food, clothes, and holidays.
That huge cohort of children grew up to pay the decades of Social Security taxes that funded the retirements of their parents and grandparents. Now, millions each year are retiring themselves.
Baby boomers' characteristics
According to Family Search, while there is no one way to describe an entire generation of people accurately, here are some general characteristics that tend to be seen in baby boomers:
Baby boomers value relationships. As they grew up, there was a growing belief in the value of spending time with family and friends. This belief was in part due to economic growth and increasing labor laws, which led to more free time.
Baby boomers are goal centric. They were raised with the idea of the American dream, and they push themselves to reach their goals.
|Family fortunes have been built and lost in just a few generations, which may explain why some parents are reluctant to pass down their wealth too early. Getty Images
Baby boomers are self-assured. This generation has confidence in themselves and their abilities. They influenced the culture of the nation greatly, and they believe that hard work makes a difference.
Baby boomers are resourceful. During their lifetime, members of the baby boomer generation have witnessed some of the greatest technological advances in history, and they often have learned to use the resources available to them. Baby boomers often learn to fix things themselves.
Baby Boomers - the gloomiest generation
Members of the large generation born from 1946 to 1964 are more downbeat about their lives than are adults who are younger or older, according to a Pew Research Center Social and Demographic Trends survey.
Not only do boomers give their overall quality of life a lower rating than adults in other generations, they also are more likely to worry that their incomes won’t keep up with inflation — this despite the fact that boomers enjoy the highest incomes of any age group.
More so than those in other generations, boomers believe it is harder to get ahead now than it was 10 years ago. And they are less apt than others to say their standard of living exceeds the one their parents had when their parents were the age they are now, Pew Social Trends reported.
|Hippies dancing during an anti-war demonstration staged by the Spring Mobilization Committee to End the War in Vietnam at Golden Gate Park’s Kezar Stadium on April 15, 1967. Ralph Crane/The LIFE Picture Collection via Getty Images
An earlier than expected increase in wealth transfer
Following the baby boomers, Generation X are born between the early-to-mid 1960s, and the early 1980s. Culturally, Generation X saw the rise of musical genres such as grunge and hip-hop, as well as indie films, The Sun reported.
They are sometimes called the "MTV Generation", as they experienced the emergence of music videos, and the MTV channel.
Baby boomers are on the cusp of giving mass amounts of money to their children. As the country’s largest generation moves more deeply into retirement, a massive generational transfer of wealth is on the horizon. Estimates about how much wealth will be transferred from baby boomers to younger generations over the next two to three decades vary widely, from around $30 trillion to as high as $70 trillion, Benefits Pro reported.
Generation X could be the primary beneficiary of that wealth transfer, gaining up to $48 trillion, according to a Cerulli Associates projection. However, many experts expect millennials to inherit a greater portion of the wealth yet to be transferred, as Generation X has already begun inheriting wealth from Silent Generation and older boomer parents.
“The millennial generation matches the scale of the boomers at 73 million, and by the numbers, more of the wealth will flow to this generation,” said O’Leary, head of wealth planning at RBC Wealth Management. “Generation X will participate but will be older by the time they inherit and by the numbers are far fewer in population.”
The unusual events of 2020 have caused some concern about how much wealth will be transferred, and when. Some industry observers have noted that boomers are a vulnerable demographic to the COVID-19 virus, and many have died unexpectedly this year as a result, causing an earlier-than-expected uptick in wealth transfer.
“Experts knew that the Great Wealth Transfer was coming, but it was expected to be a gradual transfer taking place over the course of a 40-year period,” said Nate Tsang, CEO of investment platform WallStreetZen. “With many seniors dying earlier than expected, their family members are now forced to cope with an unexpected inheritance years ahead of schedule.”
“The first generation makes it, the second generation builds it and the third generation blows it.”
A common refrain when discussing generational wealth is: “The first generation makes it, the second generation builds it and the third generation blows it.” Such idioms come into existence because they have a kernel of truth. Family fortunes have been built and lost in just a few generations, which may be why some parents are reluctant to pass down their wealth too early.
There’s a strain of the “bootstrap” narrative that pervades in this thinking: The concept is that if you withhold an inheritance, your child will be forced to pull themselves up by their bootstraps and make something of themselves on their own merit. They’ll be less likely to overindulge and loaf around.
|The baby boomer generation has been described as moving through society like ‘a pig through a python’. Composite: Getty
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They are born between 1980 or the months before to the mid 1990s or early 2000s, so many young adults nowadays would define themselves as millennials.
According to The National News, Millennials are already predicted to be the first generation to be worse off than their parents. This isn’t for lack of participating in the system that promised success. According to a report from Pew Research Center, 39 per cent of millennials aged 25 to 37 have a bachelor’s degree or higher compared to approximately 35 per cent of Baby Boomers. According to New America’s The Emerging Millennial Wealth Gap report, millennials now have 41 per cent less wealth than a similarly aged adult in 1989.
|Photo: Conversion Fanatics
Wealth for those above age 70 has increased, but it's not as significant as the increase in wealth for those in the 55 to 69 age group. This indicates that boomers are outpacing Silent Gen in wealth accumulation as they enter retirement, Business Insider reported.
Meanwhile, wealth for those in the 40 to 54 age bracket and for those under age 40 has decreased, which indicates that millennials and Gen X are lagging behind boomers as they move into those age brackets.
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