If you’re part of the Boomer generation—which means you’re in your 60s and mid-70s—all of this dreadful economic news has your attention. You’re counting on your savings to support your retirement. If the economy crashes and takes the market with it—a real possibility despite President Trump’s panicky retreat from his tough-guy tariff talk—your golden years are going be a struggle.
But what if you’re a Millennial, someone between 29 and 44 years old? Like it or not, you are a middle-aged adult. But middle-aged is not retirement age. Do you need to worry about the financial things that haunt your parents?
Yes and no. The current chaos is a much bigger immediate threat to your mom and dad. If the market crashes, they don’t have time to recover. You do. But this is still a good time to take stock of how the next part of your life will play out. Let me suggest a few things for you to think about.
As far as your money, keep doing what all the smart people tell you to do: save as much as you comfortably can and invest in solid, diversified funds. Monthly contributions to a 401(k) that invests in some broad index funds may sound boring beyond words. So what? You’re saving for retirement, not playing a video game.
The current mess is also a good time to remind yourself that there will be other times like these. Since 1980—you know, when the Boomers started popping out all you Millennial babies—the U.S. has had five recessions, including the worst downturn since the Depression. The stock market has been even jumpier. The S&P 500 has had 20 “corrections” (a drop of over 10%) and five full blown “bear markets” (a drop of over 20%).
Get yourself ready, both financially and psychologically, for those moments. When the bad stuff happens, you’re going to be tempted by advice from two very different types of financial blowhards. Call them the cowboys and the fatalists.
The cowboys will tell you that when the ordinary boring strategies aren’t generating much return, you’ve got to get a better strategy. They’ll try to sell you crypto, currency options, whatever—every cowboy has a horse. Dig a bit deeper, though, and you might well find that the “perfect investment for you” just happens to be the one that generates the highest fees for them. And even if there’s not obvious self-dealing, the cowboys won’t tell you that the alternatives either don’t have much real solid evidence to suggest they work and/or they come with outsized risk. If the market doesn’t perform well, complain to your bartender. Don’t try to beat the market.
But don’t avoid the market, either, which is what the fatalists will advise. They’ll tell you that with all the volatility the markets are no place for a nice middle-class Millennial like you. Even worse, down markets bring out these apocalyptic fatalists who will tell you that the economic end times are upon us and the markets will never recover. It will take a generation to prove them wrong—we can’t know the future until it happens—but they’ve always been wrong before.
This financial stuff is what I know best and so maybe I should stop here. But at the risk of seeming like a pompous know-it-all, there’s something else I’d advise. You should use the current crises to ask questions about something much more important than your 401(k). Your family.
You may already have kids or maybe you’ve already decided whether you want them. That’s not my business.
You should know, though, there’s a reason a whole bunch of Boomers want their Millennial kids to start families. It’s not because they want to spoil the grandkids—although that’s going to happen. It’s because they know that raising kids is—n addition to insanely expensive hard work—the most rewarding thing you can do. They don’t want you to miss out.
So, what does this have to do with the crazy economy? Nothing. Which is my point. Things might get bad—the markets could fall by 40% and then begin to claw their way back at half the rate the market appreciated for the Boomers. If that happens, things are going to be tight. But you can still afford a family. Remember your grandparents were raised in Depression Era families that had much less than you.
One last thing and it’s the most important thing. Talk to each other. If you’re a Millennial, find out if your parents are worried. If you’re a Boomer talk to your kids about the second half of their life. Money is never about money. Money is about values and emotions. That’s the kind of thing you share with the people ho love you the most.
Michael Davis is an economist for the Cox School of Business at SMU in Dallas.
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