‘Save money so you don’t retire eating cat food’ - This statement presumes my generation will ever be able to retire. In Sydney, houses are so expensive my whole generation will be practically forced to rent for life, there’s no retiring when your rent is doubled the entire aged pension.
I genuinely think the economic system will need a complete rethink in the next 20 years or so, because right now it’s completely failing to deliver for my generation. No matter how well we do, the basic life goals of home ownership and starting a family are out of reach for us.
Do Gen Z people just stop playing the game at some stage. Who is going to enforce this? The rapidly aging majority of the populace? Will they just keep paying higher and higher taxes to support elderly people who likely own much more than they ?
I don't think this is a desirable outcome, but I can also see it being an option. Essentially people just checking out from conventional work hard, pay high taxes, have less. Not sure if people will stick with that for too long.
I looked up Australian house prices and they're so ridiculous it's hard to even fathom. It's a great place but really, wow?
> Do Gen Z people just stop playing the game at some stage. Who is going to enforce this? The rapidly aging majority of the populace? Will they just keep paying higher and higher taxes to support elderly people who likely own much more than they ?
Gen Z people will enforce it. No group ever acts as a monolith. For a dumb fictional example, IIRC, all the enforcers in Hunger Games were members of one of the subjugated districts given a better quality of life due to their service. For a real-life example, I believe in Russian and Chinese prisons, the lowest level of enforcement and supervision are actually consists of inmates who've been given privileges by the guards.
> I genuinely think the economic system will need a complete rethink in the next 20 years or so, because right now it’s completely failing to deliver for my generation. No matter how well we do, the basic life goals of home ownership and starting a family are out of reach for us.
Nah, we'll just adopt something like the Logan's Run solution: replace the pension with carrousel and otherwise stay the course.
Why do you think it "needs" a complete rethink? We've had periods in relatively recent history in which many people simply live in cramped conditions and work dusk until dawn (see Victorian Britain).
I think it's far more likely that there's a general reduction in standard of living for everyone below the 90/95/99th percentile.
There's not really any pressure to prevent it, people just keep waking up every morning and going to work regardless of how bad it gets.
10-15 years ago when I graduated we had basically the same situation - the bar to win has just been raised. You either aim to be in the top 10/5/1% (adjust as necessary), or you have a life of struggling to pay the bills forever.
I think the current economic system needs significant reform, and in many countries massive reform, but a complete scrapping of all markets (which I have heard proposed in some corners of the internet) is unlikely, unneeded, and probably unhelpful
We need social democracy, expanded government roles and investment in certain fields, stronger environmental protections, and other policies that are either known to work or very likely to work.
"In Sydney, houses are so expensive my whole generation will be practically forced to rent for life"
Something i've been thinking about for a while. Gen Z and Millenials are not having children at replenishment. The older folks are living a lot longer, so our population is still going up today, but the 30 year olds who will have children are alive today, we can count them. There's less of them. As older generations start to dwindle, and are forced to move to long term care situations (which to be fair, I think a lot of boomers will resist as hard as possible), the housing supply crunch will probably go down. The real drain on society will be a raising retired population, and a dwindling working population. The older generations outnumbering the younger isn't going to help the younger generations politically either.
Thankfully, lower working-class population means more bargaining power for them, as labour is rarer. But yeah the fact that by 70 years-old most people are considered unfit for work yet the median age of congress is higher than 60 says a lot
Ah yes, indeterminate pessimism at work. The savings rate in China is 50% because in determinate pessimism you want to make sure you're prepared for the worst.
Indeterminate pessimism also means they aren't taking economic risks, whereas many Gen-Z are becoming content creators or starting businesses with their savings, so it could be more determinate optimism. Possibly naive, but time will tell.
I think the last two generations have gone through stressful times and developed "learned helplessness". I know I did at some point speaking as a millennial.
While millennials are old enough now to appreciate compounding wealth, gen Z still has a few more years until that happens on average. Most people start actively investing in their 30s.
Instead of helplessness, there is the idea of "learned hopefulness" to take a more proactive approach to one's future, even in the bleakest of times.
A good way to visualize that is by looking at the S&P 500 all-time graph and getting into the habit of regularly investing a modest amount as you skill up and expand your earning potential with age.
While I appreciate your optimism, things in Sydney for example are so egregious that if you were to deposit say the $100 each week you had left after food and rent, over 20 years with an average 5% return, you’d not quite have a 20% deposit for a house in Sydney at the prices they were when you started. In that time, they’ll probably have doubled again…
EDIT: I also wanted to add that in general the idea of compounding wealth is totally correct, but the biggest vehicle for this has been the family home for generations, and it seems that for all intents and purposes, my generation and most of the one before me have been locked out of this. Personally, I’m very regularly investing any spare money into a range of index and diversified funds to try and keep myself ahead but without the 10-1 leverage property here offers its not enough.
Honestly, why do you think house prices in Sydney will double again? Not saying your wrong but where's the appeal / drive coming from?
Australia has a pretty low birth rate, there is immigration, but not everyone moving to Australia is rich, it's limited. There is climate change which IMO makes Sydney less desirable (becoming crazy hot in summers). Why would it double again? Even if it did, why do you think it will stay at all time highs?
The only way I can see the high prices being sustainable is if developing countries populations were growing, more people with money to come compete for properties. Ultimately, that's not what's happening, so won't there be more properties on offer in the future? I've spent time in Australia and in the area I lived in Sydney, many of my neighbors were 50+, this was some while ago but still...
Anecdotally speaking as someone who grew up there, I feel investment property is tied culturally to wealth building in Australia above all other asset classes (I left 6-7 years ago so maybe it's changed), it's also encouraged by the government with tax breaks. Despite declining birth rate the property owning class will continue to buy up and rent out everything available.
I suspect the current property owning class will keep buying it up as investments and land banking, and bidding up the price as they go. The only way they could be as high as they are is as ‘investments’ where the purchaser either had capital or is anticipating selling before their loan reverts from interest only.
@bamboozled - Can’t reply directly as we’re too nested, but I think as long as our services and jobs are concentrated around Sydney, there won’t be any particular decrease in demand. The end goal for these people is to own all the property around the city that could feasibly be rented out to workers, who have no choice but to live there because that’s where the hospitals, jobs, and people are.
40 years of successive governments have set the city up to make decentralisation basically impossible. We have next to no fast transit options, our roads in and out are all privately owned toll roads, and once you leave the ‘greater sydney area’, which is fairly massive anyway, there’s basically nothing there to support you.
Workers can't afford to pay the rent being asked though? If you're paying such insanely high prices for land, you need to get a pretty high return on the land to fund the next purchase ? In that regard it seems like a race to the bottom?
Also, remote work is now becoming more of a thing than ever, so people have much less of a need to live in Sydney itself and pay crazy high rent. I can see this happening in many other major cities.
I actually left a major city recently where I was paying 5x the rent I was paying pre-pandemic. Things just aren't what they used to be in this regard. I also now have way more money to save and invest in property myself, or other things such as shares. I feel like before I was a slave, now I'm somewhat liberated.
This is what I don’t understand with the tech workers who can work remotely, why live somewhere really expensive?
I’m not in tech but it really doesn’t matter where I have a place to live so I’m in the process of buying a house in Iowa which is literally less expensive than the storage unit I rent in Phoenix — relatively speaking, over time, if you aren’t that good at math, maybe?
Sure, after closing I have to deal with the squatters (or maybe renters, dunno?) and probably have to do some repairs (again, dunno?) but the price is basically for a shell of a house which, after a bit of research, is how these things are priced if you’re willing to take on some risk and don’t mind doing some work before you can move in.
At the risk of just rambling…the flowers in the front yard are what really sold me, what kind of person is going to stay in a bank-owned house and still maintain the yard?
> This is what I don’t understand with the tech workers who can work remotely, why live somewhere really expensive?
Because of what's around it.
Funny enough you mention Iowa. My brother got a job that allows him to work remote and considered moving to a small town in Iowa because he could buy a decent house for under $100K, which would give him a mortgage that's half of what he pays for rent right now. But then he looked at the neighborhood in street view and saw an alarming number of Confederate and Trump flags and decided against it.
I luckily bought my house when I did, because home values in my area have nearly doubled in the last 7 years (Paid $338K, currently estimated worth $650K now). For me to move to a cheaper place means living in the middle of nowhere, and I prefer to live somewhere that gives me lots of options for fine dining within a 30 minute drive. I also like living in a nicer neighborhood where I don't have to worry about some crackhead trying to steal my wife's catalytic converter.
IDK, nine years of driving cabs in Phoenix I think I’m a pretty good judge of crappy neighborhoods.
Quad-Cities seems like a good area to me, that was my original plan but this about 45 minutes away in Clinton. Probably won’t be able to get away without a car like I did in Phoenix because I can’t really see me riding a bicycle in the real cold but everything I need is within easy biking distance. Hell, the Mississippi River is a leisurely seven minute bike ride away.
I’m actually totally randomly headed out there on my next load, will have to be on the look out for confederate flags.
It will eventually double. Canada’s 7%pa seems high to me, but so it seems to be. Mind, homes are much bigger, more energy efficient, better finishes. I think reasonable home appreciation should be close to the inflation rate. Or better, wage increases.
But, yah, even then it eventually doubles. Look up “Rule of 77” for an explanation.
It's the ultimate self-fulfilling prophecy. Of course the future is going to be bleak and uncertain if you talk yourself into this weird idea that you don't need savings.
Start investing the day you get your first job and let the exponential function do what it does best.
What would you suggest people invest in right now ?
Property? Demographic collapses incoming in multiple developed countries, there will be a surplus of land in a decade or two? Climate change, where do you buy that's safe?
Shares? Going backwards, lots of uncertainty, potential war /conflict about to break out in the pacific.High inflation, interest rates.
I sold all my shares a few months back, not looking like the best of times to get back in, not the worst either.
Why? Look at Japan, there is places where land is being given away, some of this land was absolutely prime real estate in the early 90's, you couldn't even buy it.
Even in those places, if you buy something, you risk being asked to move due to now crumbling or unsustainable infrastructure. So explain why this doesn't happen in other countries who are facing population decline also ?
> I have 40+ years of work ahead of me. We had recessions before.
The point of the article is that young people don't feel like they want to work and save for forty years due to bleak outlook though?
It's true what people say, we don't have an economic model for what the future looks like here. I'm not saying it's a catastrophe, I'm just saying that you might be expecting a return to normality which might be strange given the changes we're seeing in the climate, demographics etc. Likely I'll just "buy back in" because what else do you do?
My strategy at the moment is not to worry too much about paying stupid money for land, and put my money into yes, bonds or other boring crap.
> The idea is to buy low and sell high, not buy high and sell low.
Everyone knows "buy low, sell high", but few people know how to actually do it.
The one thing I've learned - Don't buy an asset because it's going up. That's FOMO. Don't sell an asset because it's going down. If you buy something going up and sell going down, that's the recipe for buying high and selling low.
Also, in the long term, the market is always up. Just keep buying shares of index funds. If the market is in a dip, that's the time to double-down and buy extra, not sell.
I think the vast majority of this is due to high home and rental prices. I really think we need to fix this, especially when demographics are trending towards less people.
TL;DR: Gen Z and Millenials, watching the collapse of their ability to buy a house, and possibly even retire on a habitable planet, are deciding to spend money on things they can actually achieve and enjoy.
I agree. As a millennial I am not making any savings and am completely content with the fact, that my retirement - when I can't work and running out of money to live - is a piece of rope.
Alternative TL;DR: we’re too far away from my grandparents’ generation where they grew up in the Great Depression and Dust Bowl then WWII and really knew what a bleak future looked like.
Labeling "generations" is stupid to begin with, but there's nothing going on at the moment. There's no millennium change or anything else of note. So what we have for the foreseeable 80 years is "the nothings."
Want to talk about an age group? Say what it is. How dumb can people be? Here, let's walk though it:
"Today, 20-30 year-olds face a variety of economic challenges."
OMG, that was soooo easy! I didn't have to make up or look up a bullshit label! YAY!
I genuinely think the economic system will need a complete rethink in the next 20 years or so, because right now it’s completely failing to deliver for my generation. No matter how well we do, the basic life goals of home ownership and starting a family are out of reach for us.