A Glimpse of the Future



With their years of schooling behind them, most Americans between the ages of 25 and 34 spend their time thinking of their new careers, their first homes, their children on the way. But while this group of young people is among the richest in history, its overall net worth and savings levels are growing much more slowly than its income, according to a new survey commissioned by the AICPA,“Savings and Asset Accumulation Among Americans 25–34.”

Our youngest clients must grow and nurture not just their young families, but their financial resources as well. The AICPA and its members are committed to helping them understand the issues and build a stronger future—for themselves and for the nation. To that end, we share with you here the Executive Summary and some of the data from the report. For the full text, go to www.aicpa.org/mediacenter .

Workers aged 25 to 34 are caught between a baby boomer rock and a fiscal hard place. Boomers will start retiring within the next few years and the increased benefits they will enjoy will put an enormous burden on the generations behind them. Unless this younger “career builder” generation saves and accumulates assets more than they apparently are doing, they will face a far less certain financial future than their parents and grandparents.

     Real Mean Income for Households With Heads Between 25 and 34 Years of Age
Source: U.S. Census Bureau, “Current Population Survey.”

Estimates place the current unfunded liability (including both current debt and the net value of future social insurance obligations) of the United States at approximately $220,000 for each person living today. With such a mounting financial burden, Americans should be saving more than ever. But they are not. Private savings rates have dipped into negative territory over the past two years and federal debt servicing levels have reached all-time highs. Without some substantial change in consumer behavior, federal fiscal policy or structure of social insurance benefits, the system likely will face enormous pressure just as today’s young workers reach the peak of their careers.

     Ownership of Savings Instruments by Americans 25–34
Year Any fungible savings instrument Interest-bearing savings account
1985 65% 61%
2000 59% 52%
2004 55% 47%
Source: U.S. Census Bureau, “Survey of Income and Program Participation.”

This study looks at the savings behavior of America’s youngest workers and discusses changes in their net worth using data collected from the U.S. Census Bureau. This study found that over the past 20 years young Americans have reduced the importance with which they treat saving and the net accumulation of wealth. The proportion of this population that possesses a savings account or other financial assets has declined significantly, as has median net worth.

     Real Net Worth of Americans 25–34 (Constant 2004 dollars)
Year Median Mean
1985 $6,788 $25,115
2000 5,449 26,670
2004 3,746 26,109
Source: U.S. Census Bureau, “Survey of Income and Program Participation.”

Between 1985 and 2004, net worth grew almost 20% for those in the top quintile of the wealth distribution and fell for the other 80%. This decline was most pronounced for those in the bottom 20% of the distribution.

The workforce of tomorrow is not financially prepared for the world they will live in. Many are clearly relying on the solvency of federal programs. Many feel they can wait until later to worry about the rest of their lives. This generation needs to be encouraged to be more financially responsible about their future. Saving is not just about retirement. It is about taking control of life and having the flexibility to deal with the many challenges and opportunities ahead.



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