by Shelley Seagler
Generation Perspectives on Financial Responsibility
Does a 25-year-old view financial responsibility to family members differently than someone who is 45? Or 65? According to the MetLife Mature Market Institute’s recent study, Multi-Generational Views on Family Financial Obligations, they do. The study reveals there are some distinct differences between the views of Baby Boomers, Generation X, and Generation Y.
The study, conducted in the summer of 2011, used the following criteria to define the generations:
Baby Boomers: Ages 47 to 65 in 2011 (born 1946-1964)
Generation X: Ages 35 to 46 in 2011 (born 1965-1976)
Generation Y: Ages 21 to 34 in 2011 (born 1977-1990)
It seems Generation Y has the highest feeling of financial responsibility for the next generation. 85% of the Gen Y participants say they would like to be able to do more financially for their children, while only 77% of Baby Boomers share the same belief.
For all three generations, education is at the top of the list. 90% of all participants believe parents are responsible for providing financial support for their child’s higher education. But when it comes to buying a home, children are likely to be on their own. Less than 10% of any generation said they feel financially responsible to contribute to a child’s down payment on a house.
When it comes to helping children deal with financial hardship, all three generations share a similar approach. 68% of all participants said they feel either an absolute or moderate responsibility to help their children cope with an unexpected financial setback, especially when the setback is not the child’s fault, but only 11% feel obligated to help a child with debt created from overspending.
The generations also agree on a grandparent’s obligation to their grandchildren. While spoiling young grandkids is seemingly part of a grandparent’s job description, this generosity does not extend to older grandchildren. 69% of Baby Boomers, 66% of Gen Xers, and 61% of Gen Yers state they do not feel grandparents are obligated to offer financial support to young adult grandchildren. Moreover, the majority of participants state that providing money for a grandchild’s education is not a grandparent’s responsibility.
Retirement, however, is an area where the gap between the generational perspectives certainly widens. Although 86% of those surveyed believe it is their personal responsibility to save enough for retirement and not be a burden to their children, the way they want to spend their golden years differs. When asked if they’d rather spend more money and enjoy retirement or spend less money and leave an inheritance, 70% of Baby Boomers said they’d rather have a good time, compared to 64% of Gen Xers, and 57% of Gen Yers.
If you’d like to learn more about how different generations approach familial financial responsibility, you can find the entire study here. On a related note, my colleague, CareyAnn Peterson shares her unique perspective in Fears from Generation Y.