Tom Sedoric and Casey Snyder

Family dinners are likely to be much more interesting in the future. A debate about paying entitlements may be the topic de jour.

In an era of increasing political polarization it has become too easy and too simplistic to paint the many combative issues with just a swipe of a broad “Blue vs. Red” brush stroke. 

This is a big mistake for a host of financial, macro-economic, and societal reasons. While there are certainly strident and palpable political divides, there are other divisions in our society that are harder to put into easily labeled boxes. Mayor Pete’s recent discussion about “generational equality” strikes a resounding chord with many. 

We believe that “demographics are destiny”. Japan is a good example of what may happen as the population of our nation (and much of the developed world) becomes older and increasingly urban.

It seems like only yesterday that Japan was feared as the great economic behemoth with its industrious culture. John Sedoric, the late head of manufacturing for a Wisconsin based international paper machinery company, reveled at the scope of the Japanese economy. But long-term success was just an illusion and Japanese accomplishments carried the seeds of Japan’s dramatic economic turmoil and decline.

A recent New York Times story highlighted this same challenge for the United States economy. “A new report from the Economic Innovation Group, a Washington think tank funded in large part by tech investors and entrepreneurs, shows that parts of the United States are already grappling with Japanese-caliber demographic decline: “41 percent of American counties with a combined population of 38 million,” the story said.

One needs only visit a local corner grocery store to see the demographic transformation in our country. The United States is becoming older and birth rates are not keeping up. Politicians may claim, without evidence, that America “is full” and doesn’t need more immigrants - but the reality is much more complex. We may lack the collective political will for a sane immigration system but, by any measure, America needs more skilled workers, energy, and entrepreneurial zeal. Our country needs immigrants to work, consume, and to pay taxes. If we don’t allow younger generations of immigrants in, we will soon see, and feel, the economic consequences; one being that our older generations will leave behind a legacy of “financial gluttony” and tremendous debt to their children and to future generations.

While relatively quiet, inter-generational conflicts are becoming like shifting tectonic plates slowly grinding against each other until the jolt and destructive nature of an earthquake. Some things to reflect upon:

  • Many seniors love their senior discounts for movies and restaurants and consider these discounts to be a rite of passage. But more people are asking why just discounts for seniors? Ben Brown, founder of the Association of Young Americans, which advocates for people between 18 and 35, recently told the Boston Globe “Older Americans are not the only ones struggling. The cost of education has exploded over the past 15 years, and the student debt crisis has reached epidemic proportions. We absolutely see the need to create new discounts for younger folks who are struggling.”
  • According to the same Boston Globe story, data, from Young Invincibles, a research and policy group, shows that young adults today earn $10,000 a year less than their counterparts did in 1989. This translates into less home buying, less savings and investments, and a decline in overall economic activity.
  • Last November Maine voters, by almost a 2 to 1 margin, defeated a home health care proposal that would benefit the elderly through targeted income tax increases on every Maine citizen.

We have many robust inter-generational discussions in our office. Tom shares his overall concern that his baby-boomer generation has been protected from the consequences of not adequately planning for retirement, a span which is longer since Boomers are living longer. Boomers may be depending on, and expect too much, from Casey’s and younger generations to financially support the tsunami of aging Boomers. It would be so much easier to continue that financial support if the baby boomers were going to leave a more prosperous future for the next generations - but they aren’t.

We wrote in previous columns that the pattern of political and cultural routine of “kicking the can down the road” has created a paralysis of inaction with zero accountability. At the current rate, the can will either kick back or the road ahead will end with the can falling off a financial cliff. Either way, the durability of ones’ plan should be emphasized as changes are coming. 

This information has been obtained from sources deemed to be reliable but its accuracy and completeness cannot be guaranteed. The views expressed are those of Tom Sedoric – Partner, Executive Managing Director and Wealth Manager and D. Casey Snyder, CFP® - Partner, Senior Vice President and Wealth Manager and are not necessarily those of Raymond James. Steward Partners Global Advisory LLC and The Sedoric Group maintain a separate professional business relationship with, and our registered professionals offer securities through, Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Steward Partners Investment Advisory LLC. 2985754