Most fiscal reform plans assume that younger workers will pay more of their own retirement costs than previous generations have paid. But Washington already favors older generations in many ways, and younger Americans face a number of financial hurdles and future challenges that must be kept in mind.
Many younger people have been hit hard by the last recession, struggling with a poor job market and large amounts of student debt. With companies cutting back on retirement and health care programs, even many of the younger Americans who have jobs do not receive the compensation or employee benefits that their parents did.
A study this month at the nonpartisan Urban Institute focuses some welcome attention on the financial struggles facing Americans now in their 20s, 30s and early 40s. Although the U.S. economy in 2010 was about twice as rich as it was in 1983, the study says, younger generations were left behind.
“Roughly speaking, those under age 46 today, generally the Gen X and Gen Y cohorts, hadn’t accumulated any more wealth by the time they reached their 30s and 40s than their parents did over a quarter-century ago,” says Eugene Steuerle, a senior fellow at the Urban Institute. “By way of contrast, baby boomers and other older generations, or those over age 46, shared in the rising economy — they approximately doubled their net worth.”
In thinking about fiscal reform, Americans should carefully consider how the necessary sacrifices of deficit reduction are distributed among people of different ages. Inter-generational fairness is essential.